Business Journal 20170101

THE NORTHEAST MISSISSIPPI

BUSINESS JOURNAL

Buy-sell agreement advice, pg. 10 JANUARY 2017

BIZBUZZ.DJOURNAL.COM

Company celebrates its 50th anniversary this year

BY DENNIS SEID BUSINESS JOURNAL

TUPELO – It’s all about family at Busylad Rent-All, which was founded 50 years ago.

Buddy and Mary Stubbs have been the sole owners of the business since 1994, and their daughter, Erin, represents the third generation of the family at Busylad.

The company has called McCullough Boulevard home for 12 years. The location is its fourth in the city, having started on South Gloster Street in the building that houses Grass TV. Busylad rents tools and small equipment to homeowners, contractors and manufacturers, as well as tables, chairs, tents, plates, dunking booths, popcorn poppers and other party equipment.

It is a diverse business that Buddy’s dad had a vision for a half-century ago.

“He retired from the National Guard in the 1970s, but he started this with a partner in ’67,” said Buddy Stubbs.

“He wanted something to do after he retired.”

There have been other partners in the business TURN TO BUSYLAD 3

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BUSINESS JOURNAL

JANUARY 2017

Not all family businesses created equal

amily businesses create about 70 percent of all new jobs, make up about 35 percent of Fortune 500 companies and account for 64 percent of GDP. Impressive numbers, indeed.

We’ve all heard that the backbone of the economy is small business, and we can easily replace “small business” with “family business.”

Not all family businesses are created equal, however.

We’ve all heard the term “mom-and-pop” stores, which are the typical small, independent, usually family owned controlled and operated

businesses that have a minimum number of employees.

There are about 1.2 million husband-and-wife teams running companies in the U.S., which shows the entrepreneurial spirit of the country.

The biggest family-owned business is none other than Wal-Mart Stores Inc., which also happens to be the world’s largest retailer.

The company had $482.13 billion in total sales for its last fiscal year – that’s more than $10.3 billion a day.

Its net income was $14.69 billion. To put that in some perspective, BancorpSouth has $14.6 bil-

DENNIS SEID

lion in total assets.

That, my friends, is a lot of money.

Founded by Sam Walton in 1962, the company still is in family, which has a 51 percent stake.

Last year, Wal-Mart handed its chairmanship to Greg Penner, the grandson-in-law of Walton, marking a third generation in the family to hold that job since the first WalMart opened 55 years ago.

Ford Motor Co. also is a family affair, and a fourth generation is at the helm

of the company.

Henry Ford started the company in 1903, and his great-grandson, William Clay Ford Jr., is now its executive chairman and previously served as CEO. Edsel Ford II, another great-grandson, is a board member.

The company is controlled by a Ford family trust run by William, Edsel, and two other relatives. The trust owns almost all of Ford’s Class B stock, which has more voting power than Class A stock. A fifth generation of Fords is now rising through the company ranks.

Meat processor Tyson Foods Inc. was founded by

John W. Tyson in 1935. His son Donald later ran the company, and another son, Randal, was an executive. Members of the Tyson family hold about 70 percent of the voting power in Tyson Foods.

John Tyson, the founder’s grandson, has been chairman of the company since 1998. Randal Tyson’s widow Barbara is also a director.

Closer to home, the R.W. Reed Co. – more commonly known as Reed’s department store, has been around since 1905.

Founded by R.W. Reed as a general dry goods store, the company has grown to four stores and is now in its third generation

of family ownership.

I also grew up in a family business – a convenience store my parents ran for nearly 40 years. But we were told at an early age that it wasn’t a business that would be passed down to the children. We were to make our own way in the world, which provided plenty of opportunities.

While I don’t have my own business to run, it’s not hard to admire the hard work and sacrifices all family businesses, large or small, have made.

It’s the American Dream, lived daily.

Contact Dennis Seid at (662) 678-1578 or dennis.seid@journalinc.com

BUSINESS JOURNAL

JANUARY 2017

BUSYLAD FROM PAGE 1

through the years, but the Stubbs have always been a part of Busylad.

Buddy, who grew up in the business, officially became involved with the company in 1983 after working elsewhere as his father suggested.

Mary got involved in the business as well, expanding to renting equipment for parties, weddings and special events. That segment of the business has grown over the years, and Erin later joined her parents at to run the special events division.

To get a better feel for the business, Buddy wasn’t given a desk job at Busylad while growing up. His father made sure he worked the counter, scrubbed toilets, cleaned equipment and learned as much about the business as possible.

And he’s learned much

about the business, leading to his being named in 2008 the president of the American Rental Association, which represents more than 9,500 rental operations and 1,000 manufacturers and suppliers.

FAMILY TIES

After his father died in 1993, Buddy and Mary bought the business from his sister and other partners and took full control a year later.

Erin joining the company in 2007 “added a new dynamic,” he said. “We were already doing the party rental thing, and she really had a big part in growing that part of the business.”

Mary didn’t get involved until 1994 after they had bought company.

“We’d always done the party rentals, and for a while I worked at growing and expanding that end of the business until we hired some coordinators,” she

said. “I think we had four or five before Erin joined us, and then when she did, she took over the advisory portion and all the purchasing for that. So she pretty much runs that side of the business and I just pay the bills, do insurance, the depreciation and all that fun stuff.”

Erin didn’t join Busylad right away after graduating from college. Buddy wanted to make sure she worked elsewhere to find her own path – which eventually led her back home.

“He made me work elsewhere, because his dad made him do that, too,” she said. “So I worked at Flexsteel Industries in Starkville, working in their fabric department ... but I quickly realized I didn’t want to do that for a long time.”

Coming aboard to lead the event and party department at Busylad was a perfect role for Erin, who said she has always enjoyed

helping customers plan for events like weddings, rehearsal dinners, parties or corporate events. Taking the stress off customers was a job she always enjoyed.

Like her dad starting out in the business, Erin began at the bottom, washing linens after big events.

“Working my way up to where I am now, I learned why we charge what we charge for a tablecloth,” she said. “It has to be washed and cleaned, you have to pay the person who washes it and that kind of stuff. And you know what it takes to wash 500 plates.”

Added Buddy, “And you know what everybody’s job is, so you better understand what they have to go through.”

That understanding helped in the design of their building on McCullough, Mary said.

“When we designed it, we involved every em-

3 ployee to look at the area they worked,” she said.

“For example we redesigned the maintenance area after they told us the process – Buddy and I had it exactly reversed, because we didn’t those jobs. So we realized it was important to learn about those jobs.”

Throughout the year, it’s not unusual to see one of the Stubbs in the maintenance area or some other area helping out.

“They like to get us out of there as quickly as possible, though,” Mary said with a laugh.

A DIFFERENT DYNAMIC Working together has its advantages and disadvantages, but Buddy said having family involved is “a totally different dynamic.”

“With a husband and wife team, you go home at night, what’s there to talk about because you know everything that happened

anyway,” he said. “With the three of us, that adds another wrinkle, and you just have to try to take the personalities out of it.”

Buddy said they don’t always succeed at separating their business from their personal lives, “because it is personal.”

Buddy and Erin often leave the building to go to lunch together so everybody can “breathe” while they’re gone, Erin said.

“Dad always says we’re not going to talk about work, but what are we doing to do – just sit there?” she said with a laugh. “It’s not as if it’s your life but it makes you who you are.”

Said Buddy, “That’s what makes this business so great because it is personal and it is part of us. When people rent from us, they know it’s us. And we’ve been fortunate to have a great staff, and they take it personally, too. They’re a part of this family, without a doubt.”

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BUSINESS JOURNAL

JANUARY 2017

Family owned Dinner Bell serving Corinth for 20 years

BY JOSH MITCHELL BUSINESS JOURNAL

CORINTH – The Dinner Bell is a community meeting place in Corinth and wants to have something for everyone.

“We try to have a very wide variety so no matter what your taste you can find something here that you would enjoy,” owner Melissa Carson said.

The Dinner Bell, 1000 S. Harper Road, has been in Corinth for 20 years and feeds thousands of people weekly.

Some of the menu items remind Carson of the food her mom used to make when she was growing up.

“I knew my mom was an excellent cook,” said Carson.

Carson’s parents, Lonnie and Janice Lancaster, bought the restaurant in 1998 after it had been open for two years. Carson ended up buying the business from them and loves running the establishment.

There are many loyal customers, some of whom come in daily. If the staff does not see some customers they will call to check on them.

“I have a very good

PHOTOS BY JOSH MITCHELL/CORINTH TODAY

Melissa Carson, owner of The Dinner Bell, bought the restaurant from her parents in 2000. staff,” Carson said, adding that the restaurant’s motto is, “Our family serving your family.”

Her mom still helps out at the restaurant some, but her father has passed away. Other family works at the restaurant, too, including Carson’s daugh-

ters and niece.

The salad bar is one of The Dinner Bell’s more popular choices. A staff member makes sure that it is kept clean and fresh.

Carson, who graduated with a finance degree from Ole Miss, said she places a high priority on

quality food. For instance, The Dinner Bell sells quality Angus beef steaks and Mississippi Delta catfish.

“If I’m going to serve it, I’m going to serve it correctly,” Carson said. “I’m going to serve the quality that I would want.”

The Dinner Bell listens to what the customers want and responds to them. For instance, chocolate cobbler started being offered daily after a customer asked for it.

“We love the customers,” she said.

Some changes are

coming to the menu, including Greek-style grilled catfish, toasted ravioli and other new selections.

The Dinner Bell also serves Southern classics such as fried green tomatoes and shrimp and grits.

Plates with a meat and three vegetables are offered daily, and Carson said the restaurant offers good prices. She wants people to leave The Dinner Bell thinking how good the food was, not how much it cost.

Recently, The Dinner Bell started catering and can serve a number of events such as weddings, business meetings and other occasions. Pork tenderloin with molasses gravy served over cream potatoes is one of the more popular catering items.

The business is involved in community activities such as the Taste of Corinth, the Home Tour and Celebrate Corinth.

The Dinner Bell is open seven days a week. The hours Monday-Thursday are 10:30 a.m. to 9 p.m. and on Friday-Sunday the hours are 10:30 a.m. to 9:30 p.m.

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BUSINESS JOURNAL

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BUSINESS JOURNAL

JANUARY 2017

Rienzi barber proudly honors grandfather’s legacy

BY JOSH MITCHELL BUSINESS JOURNAL

A new barbershop in Rienzi is bringing back the old days of the profession.

At Killough’s Barbershop on Front Street, clients can get a facial shave with a straight razor, a steam towel on the face and a hot cream neck shave. There is even a machine that massages the head.

Owner Josh Killough is carrying on the legacy set by his grandfather, Billy Glisson, who was a longtime barber in Corinth who gave Killough his first haircut.

In fact, inside Killough’s Barbershop is a picture of Killough as a young boy getting his hair cut by his grandfather.

Killough also honors the legacy of his late grandfather with displays of some of his old tools and barber licenses from the 1950s.

Killough’s Barbershop has had a great response since its grand opening a few weeks ago. Killough said he cuts all hair types, including men’s, women’s and children’s, and on his first day gave nearly 40 haircuts.

His shop is in the same building where a beauty

shop was located for about 30 years.

Killough does “old school, traditional” barbering, saying it used to be an art form. Nowadays, many barbers just want to get people in and out of the chair as quickly as possible, whereas Killough said he wants to provide an experience.

“I’m trying to bring back the old-fashioned experience that people used to have when they were kids,” Killough said.

For instance, he said it is hard to find a barber who does a straight razor shave anymore.

“It’s a lost art,” he said, adding that the steam towel on the face helps open up the sinuses.

“When people come in they come in to be taken care of.”

Killough, like his late grandfather, likes talking to the clients when they come in for a haircut. His grandfather was an outgoing person who never met a stranger. Killough likes to “cut up” with the client and some even share their problems.

“If you can’t sell yourself to them, they’re not going to come back for a haircut,” Killough said.

No two barbers cut hair

the same, he noted.

There is also a beautician who comes into the shop twice a month, and the shop also has two tanning beds.

In addition to his barber license, Killough also has two degrees from Northeast Mississippi Community College in administration, marketing and sales.

But after watching his grandfather cut hair, he was drawn to the profession and owning his own business. He grew up working at his dad’s business, Kenny’s BBQ, and developed a hard work ethic.

Killough saw a need for a barbershop in Rienzi and thinks the traditional service he offers will go well with the old town of Rienzi. He is glad to be part of bringing more businesses into the community Outside his shop is a spinning barber poll, which he says also are difficult to find these days. If the poll’s pinning, he’s cutting, Killough said.

Killough’s Barbershop is open Tuesday-Friday from 9 a.m. to 6 p.m. and Saturday from 8 a.m. to 2 p.m.

It can be reached at (662) 603-5161.

If the poll’s spinning, josh Killough is cutting hair at the Rienzi barbershop.

COURTESY

BUSINESS JOURNAL

JANUARY 2017

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Tips for family business survival BUSINESS JOURNAL

For example, studies have shown that 30 percent of family owned businesses continue on to a second generation. But that also means 70 percent of family business don’t make it to the next generation.

The survival rate decreases over time, with only 12 percent remaining into the third generation and only 3 percent stay in the family into the fourth generation.

Craig Aronoff, the cofounder of FBCG, said even with the inability of most family businesses to survive past the first generation, they should be celebrated nonetheless.

“Given an economy that chews up and spits out whole industries, technology evolving at unprecedented rates, Wall Street probing every niche to ‘unlock’ financial value, global competition ... and the social and cultural pressures that make successful family life increasingly challenging, I believe that a 30 percent generational survival rate among family businesses is incredible testimony to the positive power of family when applied to busi-

ness. I believe that these oft-cited statistics offer yet another reason to celebrate family businesses.”

Family businesses have many components, and Startup Nation offers some tips on how to make them run : • Set some boundaries.

Mixing business, personal and home life will eventually produce a volatile brew. Limit business discussions outside of the office as much as possible.

• Establish clear and regular methods of communication. Problems and differences of opinion are inevitable. Consider weekly meetings to assess progress, air any differences and resolve disputes.

• Divide roles and responsibilities. While various family members may be qualified for similar tasks, duties should be divvied up to avoid conflicts. Big decisions can be made together, but a debate over each little move will bog the family business down.

• Treat it like a business.

A common pitfall in a family business is placing too much emphasis on “family” and not enough on “business.” The characteristics of a healthy

business may not always be compatible with family harmony, so be ready to face those situations when they arise.

• Recognize the advantages of family ownership.

Family-owned businesses offer unique benefits. One is access to human capital in the form of other family members. This can be a key to survival, as family members can provide low-cost or no-cost labor, or emergency loans.

Firms run by trusted family members can also avoid special accounting systems, policy manuals and legal documents.

• Treat family members fairly. While some experts advise against hiring family members at all, that sacrifices one of the great #benefits of a family business. Countless small companies would never have survived without the hard work and energy of dedicated family members.

Qualified family members can be a great asset to your business. But avoid favoritism. Pay scales, promotions, work schedules, criticism and praise should be evenhanded between family and non-family employees. Don’t set standards

higher or lower for family members than for others.

• Put business relationships in writing. It’s easy for family members to be drawn into a business startup without a plan for what they will get out of the business relationship. To avoid hard feelings or miscommunication, put something in writing that defines compensation, ownership shares, duties and other matters.

• Seek outside advice.

The decision-making process for growing a family business can sometimes be too closed. Seeking guidance from outside advisors who are not affiliated with any family members can be a good way to give the business a reality check.

• Develop a succession plan. A family business without a formal succession plan is asking for trouble. The plan should spell out the details of how and when the torch will be passed to a younger generation. It needs to be a financially sound plan for the business, as well as retiring family members.

FAMILY OWNED BUSINESSES BY THE NUMBERS • Percent that remain into second generation – 30 • Percent that remain into third generation – 12 • Percent that remain into fourth generation – 3 • Number of husband and wife teams running companies – 1.2 million • Percent led by a female CEO or president – 24 • Percent that have women in top management – 60 • Percent of Fortune 500 companies family controlled –35 • Percent of all new jobs created – 78 • Amount of owner net worth transferred by 2040 – $10.4 trillion • Percent who have no estate plan beyond will – 31.4

••••• REASONS FOR SUCCESSION FAILURE • Problems with communication and trust – 60 percent • Lack of preparation from the next generation – 25 percent • All other issues (poor tax or financial planning, legal advice, etc.) – 15 percent

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BUSINESS JOURNAL

CALENDAR

9:

JANUARY

Starting a Business –First Steps, 1 p.m. to2:30 p.m, Holly Springs. Topic: Start-up Assistance. Are you interested in starting your own business, but don’t know where to begin? This seminar outlines the basic steps to start a business.

Topics include: regulations such as licenses and permits; legal forms of business ownership; basic marketing concepts to help analyze the revenue potential; lending terminology; outline for a business plan and other resources to assist in starting a business.

Location: Marshall County Library. To register, call 1-800-725-7232.

10:

Starting a Business – First Steps, 1 p.m. to 2:30 p.m., Tupelo. Topic: Start-up Assistance. Location: Renasant Center for IDEAS. To register, call 1-800-725-7232.

11:

Starting a Business – First Steps, 1 p.m. to 3 p.m., Starkville.Topic: Start-up Assistanc Location: MSU Business Incubator Building, Thad Cochran Research, Technology & Economic Development Park. To register, call 1-800-725-7232.

11:

How to Develop a Business Plan, 1 p.m. to 2:30 p.m., Oxford. Topic: Business Basics. This seminar is designed to assist in preparing a business plan.

The parts of the business plan are explained, i.e., industry research, description of company products and services, identifying target customer groups and a marketing plan. Financial components discussed are startup costs and preparation of a projected cash flow statement. To register, call 1-800-725-7232. Location: UMSBDC. To register, call 1-800-725-7232.

JANUARY 2017

17:

10: Starting a Business – First Steps, 1 p.m. to 2:30 p.m., Tupelo. Topic: Start-up Assistance. Location: Renasant Center for IDEAs. To register, call 1-800-725-7232.

24:

1:

18:

25:

2:

How to Develop a Business Plan, 1 p.m. to 2:30 p.m., Tupelo. Topic: Business Basics. Location: Renasant Center for IDEAs. To register, call 1-800-725-7232.

How to Develop a Business Plan, 1 p.m. to 3 p.m., Starkville. Location: MSU Business Incubator Building, Thad Cochran Research, Technology & Economic Development Park. To register, call 1-800-725-7232.

18:

Starting a Business – First Steps, 1 p.m. to 2:30 p.m., Oxford. Topic: Start-up Assistance. Location: UMSBDC. To register, call 1-800-7257232.

23:

How to Develop a Business Plan, 1 p.m. to 2:30 p.m., Holly Springs.

Topic: Business Basics. Location: Marshall County Library. To register, call 1-800-725-7232.

Business Issues – Introduction To Exporting, 1 p.m. to 2:30 p.m., Oxford. Topic: International Trade. Are you interested in getting new customers for your business, but don’t know where to begin? This seminar outlines the basic steps to exporting your product or service. Topics include: regulations such as licenses and permits; basic marketing concepts to help analyze the revenue potential; lending terminology; outline for a business plan and other resources to assist in getting new customers for your business by exporting. Location: UMSBDC, Lafayette County. To register, call 1-800725-7232

FEBRUARY

Starting a Business - First Steps, 1 p.m. to 2:30 p.m., Oxford. Topic: Start-up Assistance.

Location: UMSBDC, Lafayette County.

To register, call 1-800-725-7232.

Success Skills, through April 13, Tupelo. Presented by New Expectations in Women in Mississippi (NEWMS). Success Skills enables participants to become more successful through better understanding priorities, learning superior communication skills, understanding how to set and achieve goals, evaluating their motivators and learning to focus on what is most important in achieving their career and life goals. Opening day Feb. 2 from 9 a.m. to 4 p.m. Regular class days are from 9 a.m. to 11 a.m. on Feb. 9, 16 and 23; March 2, 9, 16, 23 and 30; April 6. Graduation day is April 13 from 11 a.m. to 1 p.m. Cost is $350 per person. All class materials and graduation lunch include. Deposit payment of $100 required along with registration from. For more information, call 662-407-1536.

BUSINESS JOURNAL

JANUARY 2017

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BUSINESS REWIND PBGC taking over Hancock pensions

BALDWYN – After settling differences with Hancock Fabrics over the takeover of its pension plan, the Pension Benefit Guaranty Corporation is assuming responsibility for paying those pension benefits of nearly 4,200 people covered by the Hancock pension plan.

Currently, about 2,400 people are receiving benefits from Hancock, and they will get a payment from PBGC for December and January on or about Jan. 2.

Letters have been sent to all plan participants welcoming them to PBGC. The agency noted that Hancock Fabrics paid benefits at the end of the month, while PBGC pays at the beginning of the month.

Hancock filed for Chapter 11 in February and liquidated its remaining stores on July 31. As of April 5, its pension plan was underfunded by $58.3 million.

Hancock’s pension plan covers 4,149 people, including 2,286 retirees.

returned to Toyota Motor Corp. in Japan.

Traditionally, Toyota officials rotate shifts every few years between Japan and assignments across the world.

Ichino comes to Mississippi from Toyota’s Takaoka plant in Toyota City, Japan. He is the third president of the plant.

Masao Fukuda was named president shortly after Toyota’s announcement in February 2007 that it would build the nearly 2-million-square-foot facility in Blue Springs.

The $800 million plant employs about 2,000 workers and has an annual production capacity of more than 190,000 vehicles.

Ichino is familiar with the Corolla sedan, which is built at Blue Springs. He joined Toyota Motor Corp. at its Tsutsumi plant in 1988 in the body weld department. He has more than 15 years of experience in manufacturing. His executive career began in 2003 after his promotion to general manager of Toyota Peugeot Citroen Automobile in the Czech Republic.

New president leads Toyota Mississippi

Air Liquide to build first US biogas plant

BLUE SPRINGS – Toyota Mississippi has a new president in Akitoshi Ichino. He takes over for Masafumi Hamaguchi, who has filled the rode of president since August 2010. Hamaguchi has

WALNUT – Air Liquide plans to construct and operate a landfill gas-to-renewable natural gas purification plant in Walnut that will enable the conversion of the methane emitted by

$5.2 million a year ago.

Assets totaled $459.9 million on Nov. 30, compared to $441.9 millon on Jan. 1 of this year.

BNA has more than 800 shareholders, and has offices in New Albany, Belden, Saltillo and Myrtle, along with a loan production office in Oxford.

Huddle House buys several area locations

THOMAS WELLS | BUY AT PHOTOS.DJOURNAL.COM

Hancock Fabrics liquidated its stores in 2016. It's pension plan covered more than 4,000 people. waste to a renewable energy capable of heating about 4,500 homes per year.

Air Liquide, based in Paris, France will design, build and operate its first LFG-to-RNG purification plant in the U.S. at the Northeast Mississippi Landfill, which is owned by the Northeast Mississippi Solid Waste Management Authority. It is operated by national solid waste company Waste Connections Inc. and receives approximately 350,000 tons of waste per year.

The Northeast Mississippi Solid Waste Management Authority manages solid waste

disposal to more than 56,000 residents of Tippah, Benton and Prentiss Counties.

BNA Bank to pay dividends for shares NEW ALBANY – BNA Bancshares, the holding company of BNA Bank, has declared a cash dividend of $2.20 per Class A shares and $2.42 per Class B shares.

BNA said the dividends are the largest ever paid, as earnings year to date totaled $5.5 million, compared to just under

TUPELO – Huddle House has acquired several Northeast Mississippi Huddle House restaurants and was operating them as corporate locations.

The stores were sold to them by Litco Petroleum, which had owned locations in Tupelo, Booneville, New Albany, Pontotoc, Corinth, Fulton, Oxford, Holly Springs and West Point. Litco also had the stores in Columbus, Grenada and Batesville, as well as two Tennessee stores in Dyersburg and Milan.

Litco owned the Huddle House on Eason Boulevard in Tupelo. The location on Veterans Boulevard is separately owned and is not part of the recent deal.

Atlanta-based Huddle House acquired the 14 restaurants from investment group Litco Petroleum, which had been a Huddle House franchisee for more than 16 years, for an undisclosed sum.

Huddle House has more than

366 restaurants across the United States with an additional 38 in development.

GDSP opens search for president/CEO STARKVILLE – The Greater Starkville Development Partnership has officially opened its search for a new president and CEO, and it is adding another position as well.

In October, Jennifer Gregory submitted her resignation to the GSDP board, citing no particular reason. She joined the economic development group in 2009 as vice president of tourism development and director of Starkville Main Street.

She was chief operating officer when she was named CEO in late 2012, replacing former GSDP president and CEO Jon Maynard, who resigned in March of that year.

The GSDP, in announcing its search for a new leader, also said it was looking to fill a new job – director of tourism development. The Partnership’s board of directors will select the president/CEO, and that person will fill the tourism director’s spot.

The next president and CEO of GDSP will be the organization’s fourth leader. David Thornell was named to the post in April 2001 and left in 2008 to return to his native Alabama.

Maynard was named to the post in October of that year.

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BUSINESS JOURNAL

JANUARY 2017

How to use a buy-sell agreement in a family business

ne of the seminal events in many family owned businesses is the passing on of ownership to a new generation. There are many ways to make such happen, but one of the most common is the use of a buy-sell agreement.

A buy-sell agreement is a legal contract that is used by many closely held businesses. Its basic purpose is to have a path in place now for the future sale of a business interest. It has other names such as a business continuation agreement, a stock purchase agreement or a buyout agreement.

When properly prepared, it can be used to determine the taxable value of a business interest.

The IRS tends to take in-

terest in transactions involving the sale of a business with particular oversight in activity involving persons who are family members. Family members can be defined as spouses, parents and descendants. While the rules can be daunting at times, one can take steps to ensure that they buy-sell agreement they set up with family members pass IRS examination.

When setting the valuation method to be used for the buy-sell agreement, it is vital that any transaction involving the transfer of business ownership represents a fair market value.

The consequences of using a valuation that is unrealistic whether it is too high or too low can be quite pro-

hibitive a n d cause an agreement to be declared invalid.

CHRIS COLE To ensure the price is acceptable, it must meet three requirements: (1) It must reflect a bona fide business agreement; (2) it must not be a device to transfer the business to family members for less than a reasonable price; (3) its terms must compare with agreements between parties who are not family members. As a rule of thumb, it is recommended that a business valuation be conducted by a professional business appraiser

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every two years.

If your buy-sell agreement is between you and the business entity itself, shareholders of the entity are related to each, and if the business is a corporation, the attribution rules of Section 318 must also be considered. These rules can determine the tax treatment of the proceeds from the shareholder’s stock redemption. Depending on the circumstances and the way the buy-sell agreement is structured, the proceeds from the redemption of the business can be classified as either a sale of the entity and subject to capital gains tax or as a dividend distribution. While the tax rates of the two are similar, it is important to

remember that an entire dividend distribution is taxable, while a sale generating a capital gain is only taxable for the portion of the proceeds that exceed the cost basis the individual has on the asset.

It is important that business owners review their agreements on a regular basis with their professional advisers (investment adviser, CPA, attorney) and the family members involved. Circumstances change be it the business itself, the market one’s business is in and the situation family members find themselves in. Any agreement must be up to date to take in all the variables affecting the business’s ownership. Estate planning must take

into account said agreements as often a business will represent a large portion of a person’s estate.

Ownership questions if not properly spelled out can be a great source of family contention that can spill over into other estate issues and leave long lasting resentment.

Owning one’s own business can be the true definition of the American dream with one of the proudest days being the passing of the business to a family member. By setting up a formal agreement that spells out the process to do such, an American nightmare can be avoided.

CHRIS COLE is a Chartered Wealth Advisor and vice president of Hilliard Lyons in Tupelo.

BUSINESS JOURNAL

JANUARY 2017

Creative Cakes

Creative Cakes celebrated its 25th anniversary with a ribbon cutting. Located at 1422 E Main St. in Tupelo, Creative Cakes specializes in custom decorated cakes for a variety of occasions including birthdays, anniversaries, showers and weddings. Creative Cakes is also a retail cake-decorating supply store and can be contacted at 844-3080.

ShannAgainS Clothing & Gifts

ShannAgainS Clothing & Gifts celebrated the grand opening of its Tupelo location at 3192 Tupelo Commons with a ribbon cutting. Offering a wide variety of high-quality women’s clothing, handbags, jewelry, accessories, gifts and more, each trip to ShannAgainS is an unforgettable shopping experience. Contact ShannAgainS at (662) 640-8971 or on Facebook.

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Enterprise Rent-A-Car

Enterprise Rent-A-Car Barnes Crossing celebrated the grand opening of its new location at 890 Barnes Crossing Road, Suite 1with a ribbon cutting. In addition to award-winning customer service, Enterprise offers fast and easy car rental bookings at affordable rates. Contact Enterprise Rent-A-Car Barnes Crossing at (662) 840-9314 or online at enterprise.com.

Find out about all the buzz in the business world at djournal.com/bizbuzz/

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Marketing for a Boy Scout with a recommendation letter

s a Boy Scout leader, I am asked on occasion by a Scout to write a letter of recommendation for him. My usual answer is “Yes, but I need to ask a few questions so that I can write it.”

When I agree, I normally know the subject – the Scout. I’ve worked with him long enough to know what his strengths and weaknesses are. So, most of the personal information I need to write about the Scout I already possess – at least from my point of view. I do ask why he is interested in the path that requires the recommendation. Usually I already know, but I need it validated by the Scout so that he and I are on the same page. I don’t need to assume.

To assist in the promo-

tion of the Scout in the letter of recommendation, I need to know the audience. I do not have a template of a recommendation letter that I print out. I don’t have a “form letter.” That will not help the Scout. I need to pull out the specific qualities that the Scout has that will impress the audience. Sometimes the Scout may not realize he possesses these qualities. With the examples that I give, he should be able to see that he does have them.

For example, I told a group of Scouts that I’d been on a business trip where I had to make reservations for lodging, make reservations for food, secure transportation and carry items needed to make a presentation. I asked the group, “Who

among you would be able to do this if asked?” As I assumed, no one raised TY ROBINSON his hand.

Then I asked the patrol leaders, “When you go camping, aren’t you in charge of making sure of having enough tents for the event? Aren’t cooking groups assigned, with each patrol member having a part to play? And don’t you as members of the Patrol Leaders Council along with the quartermaster make sure any additional gear is taken in case it is a canoe trip, a hiking trip or another kind of trip that requires special equipment?”

I could see the lights in their eyes coming on.

They’ve been training for leadership without realizing they were getting practical experience. They can do the job, they’ve proven they can do the job, but sometimes they don’t realize they are doing the job.

So, if the audience I’m given is for leadership, I include specific leadership examples. And we work at subdividing the information to make sure all the topics are covered. How does the Scout handle finances? How does the Scout work with others?

What is the reputation of the Scout among his peers?

What is the reputation of the Scout outside his peers? I elaborate the points, but I do not embellish.

I’m not opposed to a “To whom it may concern” letter, but where possible, I

like to know the name of the person or persons I’m writing. Again, this is defining the target audience.

Also, I can do a little research on the receiver to see if there is something I can include that will hold the reader’s interest.

The question whose answer can make me cringe the most is, “When do you need it?” My least favorite answer is “tomorrow.” I have to leave out information regarding time-management skills if it is a last-minute request. While it is not impossible to write a letter of recommendation with a 24-hour turnaround time, I like to have a little time to collect my thoughts. “Haste makes waste.” I can and have produced a letter in a short turnaround, but I usually think later “I wished I’d in-

cluded ...” And I want the Scout to have input into the letter. The letter is a promise being made to the reader, and the Scout should know what it says.

Advertising is built with some of the same principles applied here. Research the company with the product or service. Find what makes the company unique among its competitors. Promote those qualities to the audience that will be receptive to them.

Know your audience. Be specific. Be focused. Be timely. Deliver on the promise.

And, do a good turn daily.

TY ROBINSON is president and COO of Robinson and Associates, a Tupelo-based marketing, advertising and public relations agency.

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