Nick Sainati was living in Seattle with his wife and daughter when the unthinkable happened: his perfectly healthy and active father was diagnosed with cancer. Faced with selling the family business to receive cancer treatment, Nick’s father asked him to take over his machine shop. Four months later, Nick and his family moved back to Chicago to take over Belden Universal.
Belden Universal was founded by Nick’s Grandfather and his brothers in 1970 as Belden Tools. Since then, it has evolved into an AS9100 manufacturer of precision universal joints and driveshafts. Up until taking over the business, Nick’s career had taken a far different trajectory. He had experience in investment banking, working at an eCommerce startup, dabbling in the wine business, and working at Corporate Starbucks.
While he was able to learn about company culture, managing people, and running complex projects he hadzeroworking experience with machine shops. Nick shares how he overcame the odds to become a successful General Manager on the Making Chips Podcast. But what does the future hold for Belden?
What the future looks like for Belden Universal
Nick notes they’ve focused on strengthening their distributor relationships. It was the channel that grew for them last year. They’re focused on improving their lead times and leaning into customer service. Nick notes that in an era where international supply chains are getting stretched, it’s more important than ever to make parts in the US. They’ve re-shored projects that they had either lost or farmed out to offshore partners. The only way they can justify what they charge is with exemplary customer service and short lead times. They went from 70% on-time delivery to over 98%.
They don’t know if the booming economy will continue but his team has held up and responded well to the demand. The culture has improved and people love coming to work. They’re going to take their improvements and go from there. But many family businesses don’t end up as successful as his...
Unexpected facts about family businesses
I did some research about family businesses and found some interesting statistics:
Family businesses account for 64% of the US gross domestic product
They generate 62% of the country’s employment
They account for 78% of all new job creation
35% of fortune 500 companies are family-controlled
The greatest part of America’s wealth lies with family-owned businesses
Family firms compromise 90% of all business enterprises
More than 30% of all family-owned businesses transition to the second generation but only 12% are viable into the 3rd generation and only 3% operate at the 4th generation and beyond.
Recent research indicates that in the last five years, only 19% of family businesses are passed to the next generation. Why? Millennials don’t want to take over traditional family businesses. They’re more likely to start a different—but still family-controlled—enterprise.
I wouldn’t have picked manufacturing as a career choice. But I wanted to push and make an impact and knew I could make it my own. Why not control your own destiny and take over something that had already been started?
Create a Formal Business Succession Plan in 7 Steps
Obviously, Nick didn’t experience the typical transition of a business from one generation to the next. But if you’re considering passing down your machine shop to a son or daughter, there are a few things you can do to make the process go smoothly:
Define the vision for the future of the company and the owner’s involvement.
Plan for contingencies.
Communicate the plan to others.
Obtain an updated business valuation.
Formalize the plan by creating or updating supporting documentation.
Implement life insurance to fund identified liabilities arising from the succession plan.
We didn’t do that in the succession plan for my Dad, but it also wasn’t as applicable to my situation. But it is a big way to help mitigate the financial burden of succession. One of Jason’s good friends and his brother worked in manufacturing.
If you’d like to hear more of Nick’s story—including how he overcame all of the challenges he faced in his first year running a machine shop—listen to episode #279 of the Making Chips Podcast!
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