noturolforesl

At nolurolforest oll we do is FSC@ STUDS o TIMBERS . PTYWOOD OSBoGLU-IAMS.CEDAR

We con help you find the right product mix to ochieve LEED6 certificotion points. The lodership in Energy ond Enviomtol Design (IEED] Gren Building Roring Systemil

The Merchant welcomes letters to the editor. Please direct comments to dko eni g @ buildin g - pr oduc t s .c om, F ax 949-852-023I , or Ediror, Merchant Magazine, 4500 Campus Dr., Ste. 480, Newport Beach, Ca. 92660.

MnnrrNcs oF THE MINnr,nss

I am nearing 70 years of age and have been working for the last six months for one of my former employees from the late 1970s, early 1980s, helping to coordinate an expansion to his existing hardware and building supply.

I read your editorial ("No More Red Tape, Please," Feb., page 8) with much pleasure on the problem of what I use to call "The Process becoming more important that the Product." This problem in business is not new. I was raising cane in the company where I was employed as v.p. of sales in the late 1970s and '80s about this same kind of attitude. So much valuable time is wasted in over-scheduling of meetings, etc., that the customer takes a back seat to the process.

Your editorial was right on. I guess things have gotten worse since I left the business. Keep up the good work. You may help some stupid c.e.o. and management personnel wake uP to success by cutting out some of the wasted yak time.

Thank goodness that my old friend, for whom I am working now, remembers my hate for all the meetings.

In those days, my motto became, "Tell me what you want done, get out of my way, and let me do it. If I don't do what you want or expect, fire me." But please don't keep me sitting in meetings all day when the customers are needing my attention and services.

Bob Brown Eagle Building Center, Inc. Clover, S.C. eaglebobbrown @ bellsouth.net

ANrcB Plr on rHE BACK

I have subscribed to your publication for the last 20 years. I remember when Mr. Cutler came into Hedlund Lumber in Sacramento back in 1988 looking for us to advertise in the magazine-which we did. I was just a young kid who had worked up through the mill into counter sales at the time.

Since that time, one of the constants that I have found is The Merchant. You have the ability to keep us advised of market trends and changes. sales and managemenl tips. and the personal sides of people being promoted or moving throughout our industry.

For what it is worth, in all my travels to clients' offices, I always notice your magazine lying on everyone's desk, so you must be doing something right. Sometimes we hear the negatives and not the positives, so all I can say is keep up the good work.

Robert "Chip" McHenry Greenfield Ca. redwoodchip@aol.com

Avtnntcl's Or,nnsr Lulrnnnvlno?

Smick Lumber dates back to 1896, when Alvin W. Davis founded his retail lumberyard in the small town of Quinton, N.J. My grandfather, Isaac

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S. Snrick. pult llrsctl tltc brrsincss on Nor cnrbcr lli. 1906.

As ltust e huirnurn (I()()5) ol thc \ational Luntbcr' & Flrrililing NlrrtcriaI L)ealc-rs .\ssocnrtion. I lrrr lrlu u,t's intr-rcstccl in tlte succcss stol-ics ol ollrcr- rlclrlers, \'oLtr coluntnisl. ('urltr \\'rLltlcnlu'. docs a supcrb.job ll thcsc lrr.tielcs. \\ic thank )'oLt so r.cr\ rluclt Ior'prontotillg oLlr indLrstrv in this \\ il\

You nur\ be interestc(l in rtnc o1 nrr !rolrls trt tlrc nutionlrl lcvel. Bcinc intclcstecl in ltislort. ancl cluLirperson ol thc lllrstcrn Lrr ntbr.r Dcaicrs

,,\ssociution (l)e llrri ure . \llrlr Ilincl l'('tltt\\ lr ltnilr. \,rltl]t\'nl \..rr .i..1...1

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I tllkcrl t rtlt Shrru n I). ('orrr-lrrl torrrcr plcsirlcnt ol NI-llNID,\. rrncl hc e hrllengctl ntc to look into tlris. I l)r()nllse 1o lt|occccl olt tltis lt|o.jcct lrLtcr. rn l00t uncl n ill kccp vou t n li rn trcrl

\\'c s islt ,r oLr a hcalthv arrtl hlpltr li. Ilarold Snrick Jr.

\cu Ycrrl in l00li. I ktok fitlulrlrl to nrole ol'r oLrr llrntlrstic article\.

S rn ick l -rrntbcr

(lLrintorr. N..l

(fi-56) 9l5 0.s00 lllttttt'r.r. rlo tott Lnotr of ttn.t ltlttltt,t' tttt tl.t rtl :itttiltu It it ('(tt( t |ilitri1r,.' ll.

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AMONG the many issues that conlA.front familv businesses in times of generationai transition, strategic direction can be crucial.

The strategy that has Provided direction for the business during the incumbent generation's watch may be faltering or tired or largely completed. Strategic modilications. reinvigoration. or even a reinvention of the business may be required when the aging current leadership is unmotivated, unwilling, or unable to lead the process of change. Strategic stagnation may set in, with sometimes disastrous consequences if the business loses its ability to compete.

Next-generation managers may recognize the problem but be in a Poor position to do much about it. Their elders, still in control, may resist change and the risks that change implies. They simply may not wish to challenge established practices. Or they may fear being seen as lacking answers and the power to lead-but are still not ready to let go.

Next-generation managers also can have their own difficulties. With heavy operational responsibilities, they may be focused on the present with no time to consider the future.

By Craig E. Arnoff

When you are fighting off alligators, it is easy to forget that the job was to figure out how to drain the swamp. The next generation may be lulled into talse confidence by accepting the status quo or by their respect for their elders. Or perhaps they've fought for change and lost their battles. Or maybe the strategic differences among members of the next generation have not been addressed.

The result of any of these problems may be a lack of strategic leadership that can leave a business. its mrnagement, and employees adrift. We recommend that the next generation of family business owners come together early in the process of generational transition, in order to achieve consensus on strategic direction. Once that consensus is achieved, it should be communicated to top management, which has responsibility for developing the business' strategic plan for approval by the board ofdirectors.

When the next generation convenes to discuss strategic direction, we suggest that the conversation be guided by a number of questions. Indeed, individual members of the group should spend time in advance thinking about these questions so that each will be prepared to make effective progress toward the goal of being able to articulate strategic direction.

Are we committed to continuing our family business together? This is the most basic and fundamental question confronting each successive generation of family owners. Different family members may have different answers. Some may wish to cash out. Others' participation may be conditional ("I'm in, but only if I have a top management job.") Some may dream of their own children inheriting the business. Others may not have children. Motivations that were homogeneous in the previous generation can differ markedly among members of the next generation. These matters and the liquidity issues that may ensue should be worked through.

Are we satisfied with our cunent strategy? This is actually a very complicated question. To answer it. participants in the discussion must know and understand the current strategy and must be able to assess its effectiveness. That knowledge usually requires some rather in-depth discussions with the business' leadership and board of directors. Sometimes the conclusion is that the strategy is not clear, that it is inadequately effective or that the strategy is good but poorly executed. Such conclusions require that many more questions be asked.

Are we satisfted with our rate of growth? To answer this question, next- generation leaders should understand the positives and negatives associated with growth-which vary by industry. Sometimes, growth is required to remain a viable competitor. Sometimes, more growth means increasing risk or reducing quality. These issues must be carefully examined.

How does the availability of capital constrain our strategic choices?

The willingness of owners to provide capital to the business and to reinvest profits in the business has significant impacts on growth, diversification, and other strategic options.

What is our orientation toward risk? The next generation should consider the financial structure of the business and their willingness to use leverage (borrow money) to pursue the strategies adopted.

How patient sre we with our capital? Are the owners looking for current or quick returns, or are they willing to wait for the strategies to come to fruition? Reaching consensus on this question has a significant impact on stratesv selection.

What are our expectations about liquidity? The group should reach consensus on their desires for distributions and the ability to sell shares.

What are our business' strategic strengths qnd weuknesses? What opportunities and threats confront zs? These questions are the basis of a widely used strategic planning tool called S.W.O.T. analysis (Strengths, Weaknesses, Opportunities, Threats). The exercise is one that owners should go through to sensitize themselves to the strategic planning process and to improve their ability to offer strategic direction and feedback.

(Please turn to page 59) ffll{ \l'l'l5l r1,'rrk. ltrN.' il \(r\\ (,1

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. Consistent Chestnut/Teak Color

.5 Times Harder Than Redwood & Cedar | 0 Times Stronger Than Composite Decking l\laterial

. Meets Class A Fire Rating Requirements

. Rated ln The Most Durablc Category Of AII Wood Species Worldwide According To The United States Forest Service

Cumaru Is Resistant To l\{arine Borerso Making It The Ideal \\'ood For Docks. il{ost Other Hardnood Species. Like Ipe, Are Not Resistant To Marine Borers According To USFS Labs