Breaking business news and updates in and around Columbus
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Guest blog: Peer groups are invaluable aids to succession planning for family business leaders
(Editor’s Note: This is the eighth in a series of columns by family business leaders and advisors with information and ideas about topics unique to family businesses, developed in conjunction with the Conway Center for Family Business.)
By Jerry Bordner
Business advisory groups comprised of individuals from similar industries or performing similar roles have become useful tools for business leaders. Family business presidents and CEOs are no exception. The objective of the Conway Center for Family Business CEO Peer group, which I facilitate, is to provide a forum that allows the leaders of family-owned companies to get together to discuss common problems. The group began by creating an atmosphere of trust and camaraderie between participants to allow frank and open discussions. Monthly meetings are divided into two segments: a business portion conducted by a selected presenter and a social segment where personal challenges and issues are discussed over dinner.
The transfer of ownership is always a hot subject with family-owned businesses; whether it is from the first generation (company founder) or when future ownership transfers over time. The more difficult succession transition is the first generation to second, mainly due to the company founder’s reluctance to give up control over something he or she created. In many cases the thought of succession planning is of out of their realm and overwhelming, so they tend to procrastinate. One of the stumbling blocks is selecting the right successor. In some cases it’s clear but with families comprised of siblings, their children and their spouses the decision becomes mind boggling.
Wealth protection, especially if personal assets are tied up in the company, and wage continuation are also subjects to be considered and can prolong the agonizing process. Being able to openly discuss the successes and failures that others have experienced provides an excellent sounding board.
Being the most senior of our group I am the only one that has gone through the entire succession process and today have very little involvement in the company. After I retired, it became clear to me that the longer I was away from the company the less I knew about daily operations and the less inclined I became to render opinions, which weren’t always wanted anyway. This is part of the process of letting go which, I might add, is tough.
Our group represents a good cross-section of companies undergoing the succession process. One company founder, who is driving the succession transition, has the blue print of his plan pretty much complete and ready to be implemented; although fully executing the plan still causes him to have some sleepless nights. Others in the group will be the successors, are running the company, and are in a situation of coaxing, pleading and influencing the current owners to get on with the succession planning process. This can be difficult because of the respect and reverence they have for their parents who are faced with letting go (this isn’t isolated to the first to second generation transition). The process can be more complicated if the channels of communications are weak or nonexistent. I know of one company outside of our group that is run by the son of the owner who is 85. When the son approaches his dad about succession his dad tells him that “everything is taken care of” but the son has yet to find out what that means. This is extreme, but it happens.
Although succession planning can be a daunting process, it is a critical step to ensuring the future of your family business. Talk to other family business leaders, seek the advice of experts, but most importantly open the lines of communication with your family to start making plans that will meet the needs of both those exiting and continuing your family business legacy.
Jerry Bordner leads the Conway Center for Family Business CEO Peer Group, facilitating valuable discussions that focus on business, family and personal leadership issues in a confidential environment that allows members to share their experiences and advice. Jerry started Bordner & Associates as a plastics molding manufacturers sales agency in 1982. His technical creativity fostered many innovations and led to the inception of Laser Reproductions in 1994 to produce three-dimensional prototypes from computer designs. Today, Laser Reproductions is run by two of his sons, Paul and Bret Bordner.
Columbus Metro Library appoints new COO
From today's announcement:
Columbus Metropolitan Library (CML) has hired Nate Oliver as Chief Operating Officer (COO). He begins his new role within the organization on Monday, Aug. 4.
As COO, Oliver will be responsible for overseeing the library’s information technology, property management and security departments.
Oliver, who received his Master’s degree in Library and Information Science from Kent State, has been with CML for more than 20 years in various roles. He currently serves as public services director, overseeing operations and services at Main Library, five CML branches and the library system’s InfoLine & Rovers division.
Prior to his work as public services director, Oliver served as assistant manager at the Northside Branch and as circulation manager at the Gahanna Branch. He also previously worked at the Reynoldsburg, Northern Lights and Whetstone branches.
Currently, Oliver is the Board Treasurer for the Discovery District Civic Association. He is a former board member for the Discovery District Special Improvement District and Columbus Rotary Club.
“Nate knows this organization inside and out,” said CML CEO Patrick Losinski. “From his time serving as a page at the Whetstone Branch to his leadership as a public services director, he has embodied the passion and integrity that infuse our organizational values at CML. We are thrilled to have him assume this new role to help us better serve our customers.”
CML’s previous COO, Chris Taylor, left in 2012 to assume the role of director of Upper Arlington Public Library, and the position was not immediately refilled.
Guest blog: Six ways to control rising commercial construction costs
By Dustin Rohrbach
The good news for the Columbus region is that the construction industry is back! The not-so-good news is a backlog of projects in this growing economy has led to rising construction costs, but the impact can be minimized through a combination of best practices and targeted planning strategies.
According to Engineering News Record, June 2014 costs for commercial construction building and materials were more than two percent above inflation compared to a year ago. As construction activity increases, firms can become more selective in the projects they pursue, resulting in decreased competition in the marketplace. The cost of commodities and common materials also rises as the supply is reduced and demand elevated. Prior to 2014, Danis Columbus, like most construction managers, accounted for zero to three percent inflation and/or general escalation. However, recent local market trends now dictate five to seven percent annual inflation and/or escalation factors for projects that will be delivered in 2015 and beyond.
These six best practices can help control escalating costs:
1) Avoid escalation. Build it now because there will be a premium to wait. This is probably the most important recommendation. Some builders are adding an average of 4.75 percent to estimates for any work to be completed in 2015 and beyond in this region, with some components, such as roofing or insulation, seeing increases of as much as seven percent.
2) Invest in the architect. One aspect of a commercial construction job worth the added expense is at the planning and drawing stage. The best way to hedge against rising construction costs during a project is to lower the risk of unplanned changes. Missed details or sloppy work in commercial construction design can end up costing a lot. Poor preparation result in changes that amounted to 10-15 percent of the original total commercial construction costs. It’s smarter and less nerve-racking to pay sound architects well, rather than stressing over the work of an obscure one that may seem like good deal. A strong architect can save in excess of five percent in change orders alone due to bad details, incomplete drawings, and unsubstantiated assumptions.
3) Consider a design-build approach. To really mitigate the chance of a planning-stage disaster, go with a design-build delivery method. The main advantages an owner gains with a design-build contract is a complete shift of risk from the owner to the design-build team, one sole-source contract (which means streamlined communication/gained efficiencies), a reduction in the project schedule (up to 33 percent), and an average decrease in cost overruns by 12.6 percent.
It’s a common misconception that commercial construction managers make money on change orders that can take place during a project. Almost 100 percent of this cost is passed along to the subcontractors. Construction managers want to avoid this scenario to maintain their reputation for good project management. Hiring one construction manager to initiate a design-build project is fiscally smart.
4) Reclaim materials and systems when possible. On commercial construction retrofits and overhauls, if feasible, reuse existing materials or systems such as air conditioners and plumbing. Savings can be significant. When estimating commercial construction costs, ask construction managers to evaluate the current condition of major building systems rather than simply ordering new. This helps avoid rising costs of construction due to material pricing escalation and inflation. The opportunity to reuse major building components is always an alternative, but evaluating these options from an energy consumption angle is always something we review with our clients prior to making this decision.
5) List your needs … and wants. Start out by knowing the costs up front and having the price locked in from the beginning. The best way to achieve this is through an open-book, cost-plus contract/delivery method and getting the construction manager involved early in the project. This creates a collaborative environment where the list of needs and wants can be evaluated prior to starting construction. Owners can then make decisions on their wish list upfront during design and those changes can be incorporated prior to construction versus during construction when changes will always cost more. Decisions in the middle of a project will cost more for the designer to change the drawings and for the contractor to make the adjustments in the field versus prior to construction when those premiums don’t exist.
6) Use a builder that builds or has a field workforce. This sounds basic, but not all construction managers build. Using a builder that employs its own workforce drives efficiencies that can’t be offered by any construction manager. Construction managers that self-perform are more nimble, can start earlier and can go faster. They even have the ability to quickly step in when subcontractors are underperforming and make up lost time.
There is no one answer to hedge against rising costs in general, but a good commercial construction manager should be able to approach the task holistically and find numerous ways to keep commercial construction costs predictable.
Dustin Rohrbach is vice president in charge of the Columbus office of Danis Building Construction.
Franklin Co. job fair to focus on employing military families
Franklin County Empowerment Day Resource & Job Fair
Franklin County Commissioners, Franklin County Child Support Enforcement Agency, Veterans Service Commission and community/government service providers
At Veterans Memorial, 300 W. Broad Street
Wednesday, July 23, 2014
11 am to 4 pm
Event details via this morning's announcement:
Franklin County Commissioners, the Franklin County Child Support Enforcement Agency (CSEA), and dozens of community partners will kick off the 2014 Empowerment Day Resource & Job Fair Wednesday, July 23, beginning at 11 am at Veterans Memorial.
This is the second year that Franklin County CSEA will partner with the Veterans Service Commission to provide resources, services, educational and employment opportunities. About 50-percent of active duty members and 70-percent of Reserve and National Guard members are parents. This is a unique partnership which benefits local military families which may be struggling following the military drawdown which began last year and has left many veterans looking for work. That, coupled with the fact that veteran non-custodial parents are likely to have significantly higher arrears – 27-percent higher on average, makes this an important community event.
The event is free and open to the entire community. All parents are encouraged to bring their résumé, dress as if they’re attending a job interview, meet with area employers, learn about community resources available to them and their family, and receive child support and legal assistance from attorneys and CSEA staff. Visit Support.FranklinCountyOhio.gov for more info, including a list of exhibitors participating.
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Retail takes center stage
The Columbus Chamber and Franklin County Commissioners release 2014 Retail Report this morning at Retail Summit
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