SPRING 2016

FAMILYBUSINESSMassachusetts

Off ic ia l magaz ine of the

Inside: The Family That Auctions Together Sticks Together

FAMILY BREWING

FOR THE

1.Come Up With An Idea That You’ll Enjoy Doing For The Rest Of Your Life.

Convince A Family Member To Come Work With You.

2.Sit Back, Relax, And Watch The Money Start Rolling In.

3.

RUNNING A SUCCESSFUL FAMILY BUSINESS

DOESN’T COME WITH AN INSTRUCTION MANUAL.

If It Did, It Would Be As Easy As...

REGISTER TO ATTENDMassachusetts Family Business magazine, the Family Business

Association and The Warren Group are dedicated to honoring and

educating family businesses throughout the region. On June 7-8, the

New England Family Business Conference will be an opportunity to

meet face-to-face with family business owners and managers who will

gather to learn from their peers, hear from experts, study a variety of

best practices and network. The program is designed for professional

development and will feature high-end keynote speakers and a selection

of educational breakout sessions with panels of family business owners

sharing their knowledge.

WHEN: June 7- 8, 2016

WHERE: Omni Parker House

VISIT WWW.NEFBC.COM TODAY FOR THE LATEST UPDATES.

THAT’S WHY WE DESIGNED A CONFERENCE JUST FOR YOU!

6

1112

Massachusetts Family Business

Official magazine of the CONTENTS

8

4 letter from the board Supporting The Nation’s Economy

5 tax tips Top Deductions For Family Businesses

6 business profile Second Generation Grows Up In The World Of Auctioneering At Strategic Auction Alliance

11 fresh cash Things To Consider Before Applying For A Loan

12 breaking the business What Happens When There’s A Divorce In The Family

14 a boon to the bottom line Managing Your Printing Needs Can Save A Family Business Time And Money

8BREWING TOGETHERFamily-Owned Breweries Pop Up In Massachusetts As Craft Beer Industry Grows Increasingly Popular

3

1.Come Up With An Idea That You’ll Enjoy Doing For The Rest Of Your Life.

Convince A Family Member To Come Work With You.

2.Sit Back, Relax, And Watch The Money Start Rolling In.

3.

RUNNING A SUCCESSFUL FAMILY BUSINESS

DOESN’T COME WITH AN INSTRUCTION MANUAL.

If It Did, It Would Be As Easy As...

REGISTER TO ATTENDMassachusetts Family Business magazine, the Family Business

Association and The Warren Group are dedicated to honoring and

educating family businesses throughout the region. On June 7-8, the

New England Family Business Conference will be an opportunity to

meet face-to-face with family business owners and managers who will

gather to learn from their peers, hear from experts, study a variety of

best practices and network. The program is designed for professional

development and will feature high-end keynote speakers and a selection

of educational breakout sessions with panels of family business owners

sharing their knowledge.

WHEN: June 7- 8, 2016

WHERE: Omni Parker House

VISIT WWW.NEFBC.COM TODAY FOR THE LATEST UPDATES.

THAT’S WHY WE DESIGNED A CONFERENCE JUST FOR YOU!

4

A new year has arrived and fam-ily businesses seek a successful and prosperous 2016. The 2015

FBA Awards was a great success, and was our largest event yet. Nine awards were given to a fantastic and diverse group of family businesses.

In today’s complex world, the merits and rewards of a family-owned business are as numerous as the challenges. Fam-ily members who manage and guide the family business should enjoy the busi-ness, and if they are to be successful and prosper, they must also eventually pass along the enterprise at an optimized time for both family and asset protec-tion. Today the family owned enterprise is recognized as an important growing factor in the national economy. Accord-ing to the U.S. Bureau of the Census, about 90 percent of American businesses are family-owned or controlled.

Last year the world experienced ter-rorism, a collapse in oil prices and trouble with Russia and China, which increased global conflict and decreased economic growth. All this has led to na-

tional polls showing that a majority of Americans feel less confident. The up-coming election is dominated by social, economic and domestic issues. In many polls potential voters have expressed concerns with both parties, and say that we need to make vast improvements to ensure the way of life that so many fami-lies have worked hard to build.

Under the current administration, the economy has improved as the unem-ployment rate has fallen to 5 percent, and job growth has been consistently strong. However, economic conditions in the U.S. remain “mixed.” The crash in oil prices and dramatic rise of the U.S. dollar is expected to continue to take a big toll on corporate America’s bottom line.

Current research confirms that ongo-ing family control of a business offers ad-ditional potential efficiencies, as family decision-making can positively affect the structure and operations of their firms by applying long-term practical perspec-tive to the business. This provides the business with a strategic advantage, few-

er human resources problems, creates greater enterprise value, and drives new entrepreneurial activity. However, suc-cess is never guaranteed. The complexity of family business and the skills required for successful operations continues to in-crease at a faster and faster pace than the individual can keep up without help.

More than 30 percent of all family-owned businesses survive into the sec-ond generation. Twelve percent will still be viable into the third generation, with 3 percent of all family businesses oper-ating at the fourth-generation level and beyond. Each family’s journey in busi-ness is its own unique reward.

Family-owned businesses will contin-ue to drive our economy and 2016 and we at the FBA continue to be dedicated on your continued success. We look for-ward to seeing you in 2016! ■

JEFFREY S. DAVIS IS CEO OF MAGE LLC AND A

COFOUNDER OF THE FBA. BRIAN NAGLE IS MANAGING

DIRECTOR AND PORTFOLIO MANAGER OF FIRST

REPUBLIC INVESTMENT MANAGEMENT INC. AND A

COFOUNDER OF THE FBA.

Family Businesses Will Remain Nation’s Economic

Backbone in 2016

Directors’ Corner

DIRECTORSJeffrey S. Davis, Mage, LLCAl DeNapoli, Tarlow, Breed, Hart & Rodgers, P.C.Brian Nagle, First Republic Private Wealth Management

101 Huntington Ave., Suite 500Boston, MA 02199fbaedu.com

FAMILYBUSINESSMassachusetts

Official magazine of the Family Business Association. Inc. Editorial | Advertising | Design

A Family-Owned Business Since 1872

280 Summer Street, Boston, MA 02210Phone 617-428-5100 Fax 617-428-5119

www.thewarrengroup.comPRESIDENTEdward D. Tarlow, Tarlow, Breed, Hart & Rodgers, P.C.

VICE PRESIDENTCatherine Watson, Tarlow, Breed, Hart & Rodgers, P.C.

TREASURERJeffery P. Foley, Gray, Gray & Gray, LLP

©2016 The Warren Group Inc. All rights reserved. The

Warren Group is a trademark of The Warren Group Inc. No

part of this publication may be reproduced in any form or by

any means, electronic or mechanical, including photocopying,

recording, or by any information storage and retrieval system,

without written permission from the publisher.

By Jeffrey S. Davis and Brian Nagle

5

Most small businesses have two simple goals during tax sea-son: pay as little as possible if

money is owed, or to increase a tax return refund. Accomplish-ing this requires busi-nesses to be aware of all eligible tax deduc-tions; however, this is easier said than done. Some everyday ex-penses businesses typi-cally incur are actually

tax deductible, but are often overlooked. In order to be deductible expenses

must be ordinary and necessary. An ex-pense is ordinary if it is a common and accepted part of the particular business’ day-to-day activity. An expense is neces-sary if it is appropriate and helpful to the taxpayer’s business.

This is a vital distinction because po-tential deductions can save significant tax dollars.

Here are some examples of expenses business owners are entitled to but may be neglecting to take advantage of, or that they may be omitting altogether:

Business use of auto: A business may expense mileage (57.5 cents per mile for 2015 and 54 cents per mile for 2016) or actual auto expenses (gas, repairs, insur-ance, auto excise tax, registration, car washes, detailing, loan interest if self-em-ployed and any other expenses/supplies to operate your vehicle) multiplied by busi-ness use percentage (plus 100 percent of parking and tolls). Keep in mind, the IRS requires a contemporaneous log. Driv-ing to work is considered commuting and cannot be deducted unless the employee is working out of his or her home.

Meals and entertainment: Is your company providing meals for employees while traveling or entertaining a client?

These expenses are actually 50 percent deductible. Remember, the activity must be directly related to the active conduct of trade or business and meticulous re-cords must be kept, such as receipts. Re-imbursements to employees for business meals and entertainment should have a written company policy on maximum meal reimbursements and a maximum percentage for tips. It should not be un-limited.

Dues: If the business belongs to a pro-fessional or public service organization, these fees are deductible. However, orga-nizations that a company participates in for pleasure – whether it’s business, social, athletic, luncheons, sporting, airlines or hotels – cannot be claimed or deducted.

Health insurance: Health insurance payments are 100 percent deductible, re-gardless of the type of entity under which you operate your business (self-employed, incorporated, partnership or LLC).

Credit card charges: If you have cred-it card charges for business purposes, they are deductible when incurred, not when paid. For example, if you have credit card charges in December 2015 and they are not paid until January 2016, they are de-ductible in 2015.

Retirement plan contributions: Contributing to a retirement plan is highly recommended for two reasons: first, it defers your tax liability, and sec-ond, it helps you save for retirement. Additionally, if you are matching or con-tributing to your employee’s retirement plans, these expenses are deductible.

Gifts: If a company decides to give gifts to clients, candidates or referral sources these may be deducted. Be aware, however, that only one gift per recipient per year may be claimed.

Section 179 depreciation: Section 179 of the Internal Revenue Code allows

a taxpayer to deduct the cost of certain types of property in the year purchased, as opposed to depreciating the asset over time. This property is generally limited to tangible, depreciable, personal property used in the active conduct of business.

Operating a business from your home: If a business operates from the home of the owner, there are even more deductions for which the company may be eligible. For example, the company may qualify to claim a home office deduc-tion. In order to qualify, the home office must be the principle place of business and the office must be a room used exclu-sively for business.

Deductible home office expenses are calculated by taking all expenses and multiplying them by the business use per-centage, which is business square footage divided by total square footage. All ex-penses incurred in order to operate from a home include, but are not limited, to:1. Mortgage interest and real estate tax-

es if you own a house.2. Rent if you do not own a house.3. Homeowner’s insurance or renter’s

insurance, repairs and maintenance, utilities, cleaning services, cleaning supplies, trash and snow removal, pest control, alarm monitoring services and home office furnishings.

Taxes don’t have to be complicated. Business owners just need to know what deductions they should be looking for and where to find them. Thinking about taxes all year long and encouraging em-ployees to keep careful records of ex-penses incurred while working will make filing quick, painless and less costly. ■

BOB FINEMAN, CPA, IS THE OWNER OF ROBERT S.

FINEMAN P.C. AND A MEMBER OF THE MASSACHUSETTS

SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS.

Small Deductions, Big Savings: Top Tax Tips For Small BusinessesBy Bob Fineman

BOB F INEMAN

6

Life moves fast for the Weitbrecht family – and that’s how they like it. They have to keep their eyes

wide and move fast to get the auction items out the door.

Tom, president of Braintree-based Strategic Auction Alliance, runs the company with his wife, Janice, event manager, and his kids – who are both auction clerks and bid spotters – Justin, 18, a licensed auctioneer, and Kate, 15.

Together, they do everything from business liquidations, sales for bank-ruptcy trustees, fundraising events for nonprofits, tax possessions, tax title properties and automobile auctions, to name a few. And the kids have been in the business since they were 9 years old.

“I did the first one, I thought it was pretty cool, so I just kept doing them and here I am all these years later – still doing them,” Justin said.

“Think of a 9-year-old saying to their friends, ‘No, I can’t sleep over your house this weekend, I have work,’” Kate said.

Tom started the company 10 years ago with a friend in Milton and aver-ages 40,000 miles a year on the road, traveling to and from various auction locations and covering a wide range of territories. He’s licensed in Massachu-setts, New Hampshire, Vermont, Maine, Rhode Island, Connecticut and Florida. The company employs approximately 12 people on an as-needed basis. Also a licensed real estate broker, Tom uses the brokerage in conjunction with the com-pany’s auction sales.

Similar to the popular TV shows “Storage Wars” and “Auction Hunters,” Tom also does storage auctions, averag-ing 30 a month. Although, he points out that “reality” shows are far from real.

After the shows increased in popularity, people began overbidding on storage units, he said, hoping to find rare valu-able treasures. Those auctions have set-tled down to a more realistic level now, he reported.

Strategic Auction Alliance has also auctioneered a police evidence auc-tion, comprised of unclaimed items that have been seized, such as merchandise from shoplifters. The family recalls this Braintree auction in particular because it was the day of the Bruins’ champion-ship parade and still drew 1,000 people, backing up both sides of the highway.

Another of the family’s favorite auc-tions is for the Strike 3 Foundation, an organization created by Major League Baseball to raise awareness, mobilize support and raise funds for childhood cancer research. The family admits be-ing a bit star-struck initially by some

By Malea Ritz

Business Profile

Auctioning Brings a Family TogetherGOING, GOING, GONE

A bidder at a live auction. Photos courtesy of the Weitbrecht family.

77

Photos by Malea Ritz

Red Sox players, but appreciate working with them, and still rec-ognize how lucky they are to have those types of opportunities, they said.

‘Controlled Chaos’Getting the business off the ground was difficult at first, Janice

said, especially with young children.“It was hard when we first got started,” she said. “This was

[Tom’s] dream, and I enjoyed helping him out, and the kids were so young that we left them behind a lot of the weekends for the benefit auctions, so it was hard not seeing them. So as soon as they got old enough, they started coming with us; it just worked out re-ally well, and now I can’t imagine not having them work with us.”

“We live in controlled chaos,” Tom said. “We were initially con-cerned about the appearance of bringing minors to the auctions, and it turned out our clients really loved them. And if we didn’t bring them, they’d say ‘Where are the kids?’”

Over the years, the Weitbrechts have compiled a lot of knowl-edge and advice they offer up to newcomers. Tom says the most important things are to always honor your commitments, have realistic expectations and take ownership in what you do. “It isn’t about the bid calling, it’s about solving the entire problem,” he said.

Kate adds that newcomers should learn to improvise in case, and when, everything goes wrong. Tom suggests rolling with the punches, wearing a lot of different hats and always staying in con-trol. It’s also very important to be professional, fair and honest, he added.

They’ve also learned how to become really good at reading people’s body language, they said, because there’s a whole psy-chology behind it. They can pick up on borderline facial expres-sions or body gestures when someone is considering a bid – and they run with that. They make jokes and tempt them with phrases like, “Don’t sit on your hands,” “It’s only money, it’ll grow right back” and “Don’t look at her, look at me.”

“You just become really good at reading people to a scary level,” Kate said.

“We’ve become the masters of body language,” Tom added.Working with family doesn’t come without its challenges, how-

ever. Kate says for better or for worse, there’s no holding back. Juggling school and work can be strenuous, but Justin and Kate seem to have figured it out, according to Tom.

“It’s hard to balance being in high school and having so many high-level classes that you have a lot of homework in and have to study a lot if you want to do well on the tests. It’s pretty hard sometimes when you have weekday auctions to make some time in the event to study,” Kate said.

But Justin says all of the long travel and busy weekends has made them closer as a family.

“I don’t think we could have envisioned what it’s become when [Tom] went away to auction school – it was a change of career for him,” Janice said. “We had no idea where it would go. [Kate] was an infant and [Justin] was a little one; so it’s like, ‘One day at a time, I guess.’ We’re lucky we’re here today.” ■

MALEA RITZ IS AN ASSOCIATE EDITOR AT THE WARREN GROUP, PUBLISHER OF FAMILY

BUSINESS MAGAZINE.

An auction visitor.

From left: Justin, a staff member, Kate and Janice.

From left: Tom Weitbrecht, Father Chris Hickey, Bill Cass and Karen Cass at The Holy Mothers Collaborative auction at the Indian Pond Country Club in Kingston.

Kate (left) and Janice.

8

BREWING

8

“People want their own local economies to be strong. They want their own communities to have things that they can be proud of and be excited about. I think craft beer is the most fun way to do that.” — Pete Henry, cofounder,

True West Brewery

As Craft Beer Sales Rise, Family-Owned Breweries

Follow SuitBy Anna Sims

FOR

THE

FAMILY

9

“I was looking for what opportuni-ties were available and what were some things that we could do that we could start a brewery business around craft beer,” Cooper recalled. “Around that time, there was a huge excitement about craft beer.”

In fact, there is still a lot of excitement in the craft beer industry. National craft beer sales have been rising for the last several years, with the craft brewers’ mar-ket volume share reaching 11 percent in 2014 – its first time hitting a double-digit percentage of the market. In the first half of 2015, American craft beer production volume increased 16 percent; approxi-mately 12.2 million barrels of beer were sold by craft brewers that year, compared with 10.6 million barrels during the first half of 2014.

In Massachusetts, craft beer sales rose 97 percent in 2013 compared with 2012, according to the Massachusetts Bever-age Alliance, and the Bay State produced 372,883 barrels of craft beer in 2014, ranking 14th among all other states, according to the National Brewers As-sociation. Between 2011 and 2014, the number of craft breweries in the Massa-chusetts grew from 45 to 61.

Newcomers to the BusinessOne of those breweries is Newton-

based Hopsters, which Cooper opened in 2013 and currently runs with his wife, Karen.

At Hopsters, customers are able to brew their own beer – no previous expe-rience required. “Ninety percent of cus-tomers that come in have no idea how to cook beer,” Cooper said. “They just come here and we guide them through the process.”

Another new brewery, Jack’s Abby, was founded in 2011 by brothers Jack, Eric and Sam Hendler. The Framingham-based craft brewery specializes in lagers and re-cently moved into a new 200,000-square-foot Framingham facility to support the company’s production growth. The craft beer review website RateBeer in January named Jack’s Abby the best brewer tap-room in Massachusetts.

The brothers grew up around fam-ily business, working on weekends and breaks from school in the packaged ice business their grandfather founded. “Ev-ery family dinner at home [growing up], half of the conversation was about the family business,” Sam Hendler said.

Though neither of the Hendler broth-ers had ever owned a brewery before, the eldest brother, Jack, had worked at brew-eries in New York and Boston and re-ceived an education in brewing at schools in Chicago and Munich before launching Jack’s Abby.

In 2013, husband-and-wife pair JC and Esther Tetreault opened Trillium Brew-ing Co. in Boston’s Seaport District. They opened a new 16,000-square-foot space in Canton in December 2015. In January, Trillium received RateBeer’s rec-ognition as one of the top 100 breweries in the world – the only Massachusetts-based brewery to make the list.

Before opening Trillium, Esther Tet-reault ran her own fitness business, a job that she loved. “I really enjoyed work-ing for myself, having control over what I was doing and doing something every day that made me happy,” she said. JC Te-treault was director of medical research for a medical device company, and like Hopster’s founder Cooper, a passionate home brewer.

The couple even experimented with home-brewed and hand-bottled beer at their wedding.

“As we were creating the brand for the beer [JC] started to realize, ‘That’d be so great if I could do what I loved every day, and if I could do something I was passion-ate about,’ and ‘Wouldn’t it be so cool if we had a brewery together someday?’”

Within six months of their wedding, Esther and JC were looking at potential brewery spaces and writing a business plan.

Another new face is Belkin Family Lookout Farm’s hard cider. Although the Natick-based farm has been operating for more than 350 years, only recently did current owners Joan and Steve Belkin, who purchased the farm in 2005, begin utilizing the 1.2 million pounds of fruit produced at the farm each harvest to brew their own cider. The Belkins opened a ci-dery and taproom in June 2015 to encour-age stronger year-round business at the farm, where the busiest time is the sum-mer months, said Jay Mofenson, hard ci-der manager and son-in-law of Joan and Steve.

Acton’s True West Brewery, owned by brothers Josh, Pete and Matt Henry and their spouses, has broken onto Massachu-setts’ family-owned brewery scene soon as its newest addition.

About two years ago, True West Brew-ery’s head brewer Josh Henry opened 7th Settlement in Dover, New Hampshire with his business partner Dave Boynton; Josh’s brothers were investors in the busi-ness. The Henry brothers later decided they wanted to open a brewery together in their hometown of Acton. The brewery opened in February.

Continued on page 10

9

Lee Cooper had been laid off from a couple of jobs during the recession and was trying to figure out what to do next when he got the idea to open his own craft brewery. He’d been brewing his own beer for a few years, and was ready to see if he could turn the hobby into his day job. He had never owned his own

business, nor had anyone in his family; still, he felt that the market might be right for him to give it a try.

Trillium Brewey in Canton

10

Not all Massachusetts family busi-nesses are new to the alcoholic beverage game. The history of Nantucket-based Cisco Brewers Inc., parent company of Cisco Brewers, Nantucket Vineyard and Triple 8 Distillery, began 35 years ago. Husband-and-wife Dean and Melissa Long opened their winery, Nantucket Vineyards, in 1981. Years later, the Long’s friends, Wendy and Randy Hudson, who were living above the winery, began mak-ing beer with the wine equipment. In 1994, they opened their brewery, Cisco Brewers. Soon after, college senior Jay Harmon began working at the brewery for his college thesis. “He never left. It was a perfect fit,” said Tracy Wilde-Long, general manager at Cisco Brewers Inc. Harmon became the company’s fifth partner.

In 2000, the five partners opened Tri-ple 8 Distillery. It was at this point that they put the three businesses under the Cisco Brewers Inc. umbrella, said Wilde-Long, making it one of the few places in the country that contains a micro-brew-ery, winery and distillery.

Although there are technically multiple families behind this business, according to Wilde-Long, daughter of Dean and Melissa, “Everyone is considered family. I call Wendy and Jay my aunt and uncle, even though we’re not really related.”

Several hundred miles away in Potts-ville, Pennsylvania, the 187-year-old, family-owned D. G. Yuengling & Son is in its fifth generation as America’s oldest operating brewery. It was founded by Da-vid G. Yuengling in 1829 and is currently owned by David’s great-great-grandson, Richard L. “Dick” Yuengling Jr. Dick Yuengling is happy to report that two of his daughters are currently working in the business, so they’ll be ready to lead it into the sixth generation.

Yuengling has faced some unique chal-lenges over the years, such as figuring out how to survive during the United State’s prohibition years from 1920 to 1933. (The brewery began producing “near beer” and opened a dairy, Dick Yuengling said.) Today, it is one of the largest brew-eries in the country, employing more than 300 people and operating three produc-tions facilities – two in Pennsylvania and one in Florida. The beer is distributed in 18 states, as well as Washington, D.C.

Dick Yuengling believes the reasons behind the brand’s success are simple: Yuengling provides customers with con-sistent, quality beverages. Dick Yuengling

also emphasized the importance of pa-tience when growing a business and avoiding the pitfall of expanding too quickly. “We never open a market just for the sake of opening markets. … Our busi-ness model is to develop one market, and then move on to the next,” he said.

Family MattersOf course, starting a new business or

working with family can be challenging at times. True West Brewery’s Pete Hen-ry said Massachusetts’ construction costs, as well as the myriad “restrictions and restraints” placed on small businesses, made it more difficult to open a brewery in the Bay State than in New Hampshire.

“Every single day there are issues that pop up. Some of them are one-off issues; others are ‘oh-my-God’ problems. But big or small [when you own a business] the buck stops with you,” said Trillium’s Esther Tetreault.

“It can be very challenging working for your father-in-law,” Belkin Family Look-out Farm’s Mofenson said with a laugh.

“[When you work with family], they’re invested and have some skin in the game,” Hopster’s founder Cooper said. “This [brewery] is our only family income. My wife’s not going to not show up to work. … She’s someone I know I can always trust.”

Staying LocalMany of the breweries chalk up their

success to remaining local.True West Brewery is a “Community

Supported Brewery,” said Pete Henry. “It’s like a CSA [Community Supported

Agriculture], where you can buy a share, and the money from that share goes to the farmer to help buy seeds, fertilizer, whatever they need. As the farmer pro-duces produce or meat or grains or what-ever it is the CSA is targeting, you get a piece of it. We do the same thing with beer.” The brewery also has a farm-to-table restaurant.

Hopsters gets the ingredients for its beer from local farms, then returns the spent grain from its production process to the famers, who use it to feed their livestock.

Many of the breweries also agreed that the recent surge in craft beer consump-tion is part of a larger trend to go local. “People want to support a local company and operation,” said Belkin Family Look-out Farm’s Mofenson.

True West Brewery’s Henry agreed: “I don’t think this is exclusive to craft beer. It’s a change in the way people are think-ing. In regards to food and drink and the economy, there is a move toward trying to be more local. … People want their own local economies to be strong. They want their own communities to have things that they can be proud of and be excited about. I think craft beer is the most fun way to do that.”

“We certainly take advantage of [cus-tomers’ desire to support local compa-nies], but we don’t have to do much be-cause I think people are actively seeking it. It’s almost something that if you play up too much, you lose some authenticity,” Henzler said. “For us, we are in Framing-ham. We are local. There’s no need to play anything up. It’s who we are.” ■

10

Continued from page 9Hopsters in Newton

“[When you work with family], they’re invested and have some skin in the game. This is our only family income. My wife’s not going to not show up to work. … She’s someone I know I can always trust.” — Lee Cooper, cofounder, Hopsters

11

Getting Your House in OrderThings to Consider Before Applying for a Business Loan

By Chris Ward

Small businesses create the lion’s share of the new jobs in this country and family-run businesses are the

backbone of that sector. That’s why bank-ers are committed to providing loans for these companies – the lifeblood of Main Street America.

However, before applying for a loan, there are a number of factors for a family business to consider. Besides identifying the purpose and type of loan, businesses should have strong credit. When it comes to maintaining a healthy score, there are several elements to consider:• Look to establish business credit early

on and work on building up the busi-ness credit history.

• Make payments on time.• Keep individual credit cards within

the credit limits.• In the case of multiple credit cards,

keep your balance well below 70 per-cent of the total credit available – the so-called credit “utilization.”

• Do not apply for too much new credit over a short period of time.

Businesses should also understand that derogatory information included on their business report such as late payments, suits or liens, will have a negative effect on their business score. Businesses should habitually review their credit to ensure there is no misreported information and that any satisfied liens or judgments are properly reported.

Further prep work includes choosing the best bank to partner with on a loan. One of the best ways to locate the right bank would be a referral from another small business owner, or from your CPA. Additionally, a bank that is conveniently located, or has a branch presence close to the business, also provides the kind of ready-made service you’ll need to foster a strong relationship with the bank. Cer-tainly, starting a discussion with your cur-rent bank is a solid option as it can likely avoid the costs and time requirements

of changing banks. And try to limit your credit relationships for your business. Two to three lenders is preferable, espe-cially on the revolving credit side.

Similar thinking can be applied to refi-nancing existing loans. Typically, the most common reasons a family-owned business may seek to refinance is to secure lower interest rates or costs, or dissatisfaction with the level of service provided by their current lender. Family businesses should consider the accessibility of a financial institution as well as the competitive loan rates and fees compared to their current situation. They may also factor in the size and abilities of a lender to support the needs of the business for the foreseeable future.

Today’s small business lending offers an array of options, depending on whether you are planning a new location, launch-ing a product, or looking to hire more help. Do some research about your op-tions and if you are a new or growing business, ask about Small Business Ad-ministration (SBA) loans that offer more flexible terms, helping to improve cash flow. Be ready to explain your business plan, and perhaps even the story behind your business, as well. It gives you a road map and makes institutions more com-fortable in partnering with you to help grow your business.

It’s also important not to bite off more than one can chew. It may be tempting to borrow a lot of money initially to grow the business as quickly as possible, but it’s bet-ter to grow it slowly and manage profit-ability at the same time.

In addition to helping you determine the best type of loan for your business – which might include a traditional term, mortgage, line of credit or business flex for things like assets and equipment, or an SBA loan – an experienced banker will work with you to determine the right suit of tools for you. This can range from cash management to special business bank ac-counts, which may offer no monthly main-tenance fees and no minimum account balances for small and startup businesses.

Citizens Bank – and all banks – under-stands that financing is critical to the suc-cess of a growing business. There’s a bank out that that fits your needs, whether it’s a drop box, a refinance or a new loan. Many banks, including Citizens, have long track records of lending to family-, women- and minority-owned businesses, and have tailored borrowing solutions that can provide financing for enterprising family-owned businesses to help them conserve capital and maximize cash flow. ■

CHRIS WARD IS PRESIDENT OF BUSINESS BANKING FOR

CITIZENS BANK.

12

When the Vow Breaks

Family businesses face many chal-lenges as they strive to survive and thrive. Among the most difficult to

overcome is one that is unique to a closely held business: divorce.

A divorce can be financially and emo-tionally devastating to a family business. We have all overheard a business owner refer-ring to his or her com-pany as being “like a child.” The custody

battle for the business can be expensive, contentious and, without proper planning in advance, potentially fatal.

This is particularly true if a company has been jointly owned and its growth has been a labor of love for both spouses. Even when one spouse is a non-owner who does not work actively in the business, the company is frequently a couple’s largest asset; thus

its value becomes a point of contention in divorce proceedings.

For a family business to survive a di-vorce, the possibility of divorce must be anticipated and planned for well in ad-vance. While nobody wants to imagine a time when a marriage is dissolved, it is in-excusable to ignore the possibility.

The incorporation documents of ev-ery closely held business should include an agreement about ownership rights and stakeholder value in the event of an owner’s divorce. Succession planning documents should also include provisions for the dis-solution of the marriage of one or more of the next generation of owners.

Disposition of the business can be ad-dressed in a premarital or post-marital agreement, carefully structured and ne-gotiated to provide certainty in the event of a divorce. Every possible permutation of what might occur should be considered and addressed, such as spouses who are

joint owners, a non-owning spouse who acquires a share in the business as marital property, and stakeholders who are not party to the divorce but whose ownership is affected, among others.

A variety of options exist to resolve the issues of ownership and control of a closely held business upon the divorce of one or more owners. It is generally in the best interests of both parties to the divorce if a business remains a viable operation, al-though this is not always possible.

Buyout of a Spouse’s ShareOne solution to settle control of a busi-

ness in a divorce is for one spouse to buy the other spouse’s ownership interest, or for the spouse who is an owner to com-pensate the non-owning spouse for the value of the owner spouse’s interest in the business. A typical hurdle is finding a valu-ation method and pinpointing a number on which both parties can agree. The services

By Edward D. Tarlow

The Effect of Divorce on a Family Business

ED TARLOW

13

101 Huntington Ave., Boston617.218.2000 | tbhr-law.com

At Tarlow Breed Hart & Rodgers we celebrate the differences that make family businesses special.

With guidance from our family business specialists, your company could bear fruit for generations

to come. Isn’t it time you had a conversation with Ed Tarlow, Chairman of our Family Business

Practice Group? Call Ed at (617) 218-2011.

Not all family members are alike.

Rise Above the Ordinary.

of an independent certified value analyst (CVA) may be required.

Transfer or Redemption of Shares

If a non-owner spouse receives owner-ship shares in the business as part of a di-vorce settlement, it may be in his or her best interest to “cash in” by transferring the shares back to the company in return for cash. This may put a financial strain on the business (and the owning spouse), but can also create a clean break that leaves control of the business with the active spouse.

Sell the CompanyIf the divorcing couple does not have

a binding agreement in place and cannot come to terms on how to divide their in-terest in the business, it may come down to selling the business to a third party. The downside is that the income stream from the business is eliminated, and the forced sale of a distressed business may lower the sale price.

Continue Co-OwnershipIn some cases a business may be in a fi-

nancial position that precludes buying back shares, the company may not fetch an ac-ceptable price if sold, or both spouses may simply wish to see the business continue, and therefore come to an agreement to remain co-owners. Some even keep their business partnerships in place for the sake of any children who may be employed in the family business.

Divide the BusinessIf both divorcing spouses desire to con-

tinue in the business, one option is to split the business into two separate compa-nies, each owned by one of the divorcing spouses. This works well when a business has multiple divisions or business units that can be run separately, or when a company’s real estate assets can be split off from the operating business.

All of the possible resolutions cited above carry important – often overrid-ing – tax implications. Decisions about how shares are transferred, redeemed, purchased or otherwise shifted from one spouse to another should always be made with the goal of minimizing the tax burden for all parties.

According to federal statistics, the di-vorce rate in the U.S. is 50 percent, so it is almost inevitable that divorce will affect closely held business owners. Accepting this possibility and creating a well consid-ered plan ahead of time can help reduce uncertainty at a time of great stress and disharmony. ■

EDWARD D. TARLOW IS A FOUNDER AND SHAREHOLDER

AT TARLOW BREED HART & RODGERS, A BOSTON LAW FIRM

THAT SPECIALIZES IN FAMILY BUSINESSES, AND A FOUNDER

AND PRESIDENT OF THE FAMILY BUSINESS ASSOCIATION OF

MASSACHUSETTS. HE CAN BE REACHED AT (617) 218-2011,

OR VIA EMAIL AT ETARLOW@TBHR-LAW.COM.

Additional Resources“Divorce and the Family Business – What are the Options?” by William Long and Scott Sissel, Business Entities, March/April 2007“Marriage, Divorce and the Family Business,” by Charles A. Redd, Univer-sity of Miami Law Center’s Philip E. Heckerling Institute on Estate Planning, Volume 42, Chapter 4, “Business Suc-cession or Business Cessation? Passing the Torch Without Dousing the Flame.”

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Just like all commercial enterprises, family-owned businesses are con-stantly seeking ways to streamline

and increase their bottom line. Often, in businesses that have been handed down from generation to generation, there is a tendency to continue operations in much the same way as in years before. And while there is much good to say about tradition and maintaining a long-held brand, what is sometimes overlooked are the many ben-efits today’s technology has to offer – par-ticularly in the area of document printing and distribution.

The costs associated with document out-put may not seem large in the scheme of an entire operational budget, but consider this – most businesses spend up to 3 percent of annual revenue on printing and document distribution, with IT departments allo-cating 15 percent of time to printing and related actions, making the need to track equipment usage, reduce costs and increase efficiencies a must.

The wide discrepancy between the op-erating costs of desktop printers, copiers and multifunctional devices to generate an individual document cannot be disregarded when balancing a business budget.

It wasn’t long ago when the “big box stores” copiers, printers and fax machines were the pinnacle of document generation, but that process has been refined through the innovation of managed print services (MPS), so much so that in recent years MPS has taken the lead in document solu-tions – and with good reason.

MPS looks at per-page cost as the bot-tom line, in contrast to the final price point of office equipment. Fundamentally it considers all costs associated with leas-ing/owning and using printing and imag-ing equipment, including maintenance and ongoing support – of particular significance for businesses with multiple locations. Print management software tracks the number of copies each piece of equipment uses and produces a report, allowing for increased efficiencies. A print management program can realistically save a business up to 15 percent or more in its operational costs.

A MPS system tracks documents and flags any excessive use of machines with high per-page costs. Since most office en-vironments now use color, it’s critical that businesses have current technology that allows them to generate documents in the most efficient manner.

MPS can be introduced in phases and is set in motion with an initial analysis of a company. The assessment evaluates the ex-isting printer fleet, current costs and opera-tional bottlenecks and, when applicable, the amount of time an IT department spends on document production. After the analy-sis there is a “discovery meeting” to review a formal assessment report with company owners and/or key stakeholders. The report summarizes and documents all data and op-erational costs of the existing equipment fleet. Potential opportunities to consolidate and standardize are then highlighted and discussed. Ultimately, print management looks at all phases of document generation, from the cost of the equipment and sup-

plies through any necessary service support. An increasingly important component

of an MPS system is an in-place tracking software program that enables the provider to monitor clients’ systems remotely, alert-ing them to potential misfeeds or low toner, thereby averting work stoppage.

Yet another critical component to MPS is security. One of the imperatives of any business is to ensure that information is se-cure and compliant. A managed print ser-vice program provides critical mandatory security; in fact, it can trace a document back to the device it was printed from.

Also important to consider when insti-tuting a managed print services program is the paperless office trend. Environmentally, MPS is an effective mechanism to reduce waste, recycle paper, ink and other resourc-es. It is a “green” document solutions ap-proach that is not only cost effective, but can also lower the carbon footprint of a business.

An across-the-board print management system is also less stressful for staff, particu-larly if a business has multiple offices. The frustration of dealing with equipment that may vary from office to office is eliminated making it easier for people to do their jobs.

In a nutshell, MPS provides an audit of document generation costs and equipment efficiency. Ultimately, this program is a necessary step toward a business’s increased efficiency. ■

RAY BELANGER IS PRESIDENT AND CEO OF ROCKLAND-

BASED BAY COPY, WWW.BAYCOPY.COM, A SECOND-

GENERATION FAMILY BUSINESS.

FAMILY BUSINESS SERVICE GUIDE DIRECTORY

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15

“The biggest challenge for your business today? Tomorrow.”

Transitioning ownership of your business will undoubtedly be one of the most significant events of your life. And one you may not be prepared to even think about right now. However, with careful planning at each stage, you’ll be ready for what’s ahead – and confident that you’ll preserve everything you’ve worked so hard to build. Growing your business. Your banker and insurance specialist will help determine which deposit, lending, cash management, and insurance solutions will best fuel the growth of your business. You’ll also want to ensure your will and other estate planning documents are in order, and that you’re taking advantage of tax-minimization strategies. Transitioning business capital to personal capital. As your business evolves, you may consider selling or transitioning to your son or daughter, or someone outside the family. We can help you explore exit strategies, secure the right buyer, and value your business. We’ll also help you determine how and where to invest your wealth, and how to manage your liquidity and cash flow needs.

Managing and transferring personal wealth. This is when all your hard work pays off. You’ll begin to implement trust and planning strategies to transfer wealth to the next generation. You may also have the freedom to donate resources to those organizations you find meaningful.

At Wilmington Trust, we can help create a plan for each stage of your business and your life. Founded by a family business leader more than a century ago, we have the experience to help guide you through times of growth and succession. Our approach focuses on both your business and personal financial needs, allowing us to make each transition in your journey a seamless one. For more insight on how to successfully prepare for what’s next, view our capital transitions video series at wilmingtontrust.com/capitaltransitions.

Portrait by renowned illustrator Joseph Adolphe.

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of services required by clients. To learn

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This article is for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service. This article is not designed or intended to provide financial, tax, legal, accounting, or other professional advice since such advice always requires consideration of individual circumstances. If professional advice is needed, the services of your professional advisor should be sought. Private Banking is the marketing name for a product and service offering.Investments: • Are NOT FDIC-Insured • Have NO Bank Guarantee • May Lose ValueWilmington Trust is a registered service mark. Wilmington Trust Corporation is a wholly owned subsidiary of M&T Bank Corporation (M&T). Investment management and fiduciary services are provided by Wilmington Trust Company, operating in Delaware only, and Wilmington Trust, N.A., a national bank. Loans, retail and business deposits, and other personal and business banking services and products are offered by M&T Bank, member FDIC.©2016 Wilmington Trust Corporation and its affiliates. All rights reserved.

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