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Episode 103: Pivoting from Private to public in family business

Nisha Balwani* shares her journey as a second-generation CEO in her family business, RCI Technologies on this episode of The Family Biz Show.

Nisha discusses the challenges and successes of the succession process, including the importance of clear communication and transparency, the need for patience and the value of bringing in outside expertise for exit planning and wealth management as well as the significance of being part of a CEO peer group for support and guidance.

The conversation covers topics such as balancing personal and professional life, lessons from books, leadership lessons from Brene Brown's "Dare to Lead", the importance of work-life balance, and the CEO playbook.

Episode #103 Transcript

Michael Palumbos (00:01.274)
Welcome everybody to the Family Biz Show. I'm your host, Michael Palumbos with Family Wealth and Legacy in Rochester, New York. And today we have Nisha Balwani from RCI Technologies, a second generation CEO that's going to talk to us all about their family story and their business and how succession worked as a second generation sibling. So welcome, Nisha. Really appreciate you joining us today. Thank you for having me. So one of the things that we like to do on the show is to kind of hear what was your journey to becoming the next generation in the business.

Nisha Balwani: Yeah, absolutely. I'd love to share that. And I love hearing other people's journeys too. So as Michael mentioned, I'm second generation in my family business. We didn't really have a clear succession plan. I think that might be typical of first generation businesses. So it wasn't like I was born and there was just this like, you're going to take over the business one day. As Michael mentioned, I have an older brother also who there was always like,

Maybe one of our kids will take over, but we don't know. And we didn't know the path to getting there. So I was very interested in business. I studied business undergrad. I got my MBA at Columbia. So I always wanted to study business. But my parents are very encouraging of having a career of your own, a trajectory of your own. If it brings you back to the business, it does. If not, that's no harm, no foul. So I worked at Unilever, one of the Fortune 500 CPG companies coming out of undergrad.
And I enjoyed it. I really professionalized there. I liked the team I worked with, but it didn't take me that long to realize like that wasn't my forever. I really liked smaller work environments. And I think there is something to be said about growing up with two parents who are entrepreneurs. Like there's no line between work and personal life. So in the end, it turns out that both my brother and I really liked that entrepreneurial life whether it led us to RCI was really the big question. So I kind of had a little bit of a aha moment in my mid 20s after I'd been with Unilever for a few years. And sadly, my father was actually diagnosed with his first round of lymphoma, which is a cancer of the immune system. And he's doing great now, lots of great doctors and a great care team.

But I was like 25 and you kind of think you have your whole future to figure out your dreams. And then something like that happens. And you're like, I have a family business I could be a learning from or be growing. So, you know, that was one of the things that came out of his diagnosis. The second was that in a first generation business, it was my mom and my dad really running it. There's no middle management, real senior leadership. So my mom stepped back to really be a caretaker. So who does that kind of leave running the business?

So they felt like I wasn't seasoned, I wasn't at CEO level, but at least I was a family presence in business development and things like that. So I took that as this is my sign from the universe to join their family business. And that was the beginning of really me working with them in a more senior way. I think prior years before that, I was stuffing marketing envelopes and high school and all that.

But this was the first time I entered as a real business development executive. My dad recovered very nicely and that was great. And he came back into the business. And then that's when like the butting of the heads began. I was like, you know, too immature, maybe too impatient to see kind of his struggles and the way he was leading the company. So I thought I also always wanted to get an MBA. Now's the time I went to get my MBA. I graduated and it was the pandemic.
And yeah, and so my parents kind of had a little bit of a change. They were like, not sure how to get this company up and running remote. So then they kind of leaned on my expertise and that change was really what fueled me to become the next management team of the company.

Michael: Nice. So when your parents started the business, first of all, how long ago was it when they started it?

Nisha: It's been, yeah.

And what was the company doing at that point? Where did the genesis for the idea to start this come from for them? Yeah, this is my favorite part of the story because as I'm getting older, I'm realizing like, holy hell, like it's really hard to build something from nothing. And we took it for granted, I think, as children. And now I'm older and I'm like, this is wild. So my parents are also immigrant entrepreneurs. So they came here. My dad is from India and my mom is from East Africa. And they both.

came here and they met in New York. And my dad was an independent consultant, a technical consultant. So he was actually doing the work that a lot of our technical team does now. And what he saw then, so now you got to think this is like in the 1980s, there was a huge need for a lot of this talent coming from abroad that was very skilled technically. And America really needed this talent. So my dad was working at some of the Fortune 500 companies at that time.

that were very big, like telecom companies like AT &T, Verizon, Sony. And he realized that, hey, I'm working as an independent consultant, but the person I work for actually needs a team of 10 or 20. And I have a huge network in India, so let me see if I can bring people from there that are highly skilled and staff them onto these project teams. So I really admire that they came with nothing.

They had no resources, no family, no money. And they gave every single thing. It was like, when I look back at their story, I feel like my dad almost was like, I'm going to build this company or nothing. Like, I have no choice but to build this company. So I think that was really, really cool. He tried a few times. Like, I think there had been a few failures in the beginning where he kept falling back onto independent consulting. But then eventually, the company really hit its stride.

Michael Palumbos (07:02.894)
in like 1983, 1985. Just a few years ahead of when I was born. So I've never known a life without RCI, which is kind of incredible. That's very awesome. And so a lot of the work that he was doing was in the telecom world, was working with, finding staffing for other big companies. Today, that's not...

the vast majority of what you do, is that correct? Yeah, no, we had a major transformation, which is really cool. So you're right, he started basically in the private sector and there was a huge need there. And then around 2007 with the financial crisis, my parents really had to think about how do we reinvent this business because corporations no longer have this big budget.

finding talent abroad and bringing them over, that also wasn't really as easy as it was before. So they found a huge need in the public sector. And actually this coincided when I had my aha moment where I was like, oh, I should really either learn from my parents or help them grow their business. And I think that worked out well when I look back because I had my own kind of thing to chew on, which was how do we enter public sector?

contracting, which if anyone is listening who is in public sector contracting, there's a huge moat. It's very hard to get into. Once you're in it, it's a little bit easier. But getting the certifications, it's kind of a long, everything is a long lead time. And so we finally pivoted into that. I would say it took three or five years to even get our first contract. And now we're primarily 95 % government, focused on government work.

So that took about 10 to 15 years to get there. That is one heck of a long pivot. That is not like, hey, let's flip the switch on our manufacturing machines and start bottling hand sanitizer. You know what I mean? Totally. A lot of companies did that during COVID, but that is not what you guys did. That's amazing to take that long. No.

Michael Palumbos (09:26.958)
Yeah, and I'm really glad we did because like when I look back I think about the needs of the public sector and just the needs of the government in IT specifically, which is where we are. And it's just growing, you know, they have a massive need to modernize. Like if I'm a citizen and I can order Uber Eats and it can get here in 20 minutes, then my expectation from my services that I need as a citizen like are also increasing. So I think that there's a huge need and it was a great pivot. I don't think

We saw that then, but I think now over time we're realizing that that transformation is really what's keeping us alive. That's a really interesting comment, though, and I want to make sure people don't miss that. You just said people are, what they're used to being able to do someplace else is how they feel they should be able to do it in other places. So you have great service and a great.

great expectations when you're at Starbucks or whatever the Uber eats or whatever the place is, that translates into all the other experiences that you have. And people forget about that, that you're not just being compared to other people in your industry, you're also being compared on a regular basis to the rest of the world and other industries. And people are making those assumptions and those comparisons on a regular basis.

Absolutely. And I think we learn that now. So now when we do any sort of future planning, when you're looking at external trends, it's really interesting. Look at what the rest of, not just your clients, but what people are expecting. I think COVID accelerated a lot of this as well. So think about how much we use our mobile phones as a start. And then COVID was like, well, I physically can't go and give in a piece of paper. So if the government is everything is hand delivered with paper,

even from a contracting perspective, we used to get things notarized and drop them off in a mailbox. And now it's like e -signatures and things like that. So it is a really, I really enjoy some of the work we do now, especially given the transformation from private to public. Right. When your parents started the business, talk about, you know, at the beginning it was just the two of them, talk about, you know, how did they go about,

Michael Palumbos (11:50.486)
you know, bringing more people to the business and where was it, you know, where was their comfort level? What did they, where, where did they get the business to in terms of like revenues and employees and you know, that kind of those kinds of things. What was that like for them? Yeah, absolutely. I think it's, it's cool to see, you know, in the first generation what the skillset really is. And the skillset is really hustling and grinding and, and like getting, getting from zero to something. Um,

maybe the skill set is a little bit less in bringing in middle management out of the senior level and really delegating and letting go. So I think growing up, I saw a lot of it always being my parents, like our family vacations. Like even when they hired people, the decision -making was never really delegated below. So as they expanded, they brought in some level of like, you know, administration.

recruiting since we always have some sort of staffing needs. Definitely people who are doing billing and invoicing and accounting. So I think at some point, maybe their office had 15 to 15 people on the back end. So those are non -technical and maybe over like 100 technical people. So when I say that there's technical staff, those are people who are going to the client, either working on a project for a client.

building a technical solution for a client or just being staffed to an existing client's team. So we kind of separate, we think of our business, you know, those are more of our technical staff and we try to always have them staffed on a project. And then we have a back office staff who really supports that whole operation. So I think the first generation does a really good job at getting what needs to be done.

And then I feel like I had the privilege that they gave me, which is like, go get a business education. So I went and got an undergrad business school, master's, and then coming in and really thinking, okay, what is the structure of this business that lets us keep growing? So I think there's a different way of thinking. I don't think I could have done what they did, to be perfectly frank. You need a huge risk appetite. You need just endless, endless amount of grit. And I think,

Michael Palumbos (14:10.542)
But what I do find that I'm bringing is more of that formal structure of who can we have in similar C -suite seats to me. And there's a lot you can learn from bringing people in right now. The most senior person that works with RCI right now is amazing. He has like a 50 -year -long consulting career. I don't have that. So it's a great balance.

there's a shift that happens from, you know, what do we have to do and how do we have to do it to who? So you can make that shift. And I think you hit the nail on the head more often than not. It's really difficult for the founders to do that because it's their baby. It was, we did everything. We're the ones.

that almost didn't make payroll or we didn't make payroll and we had to take a loan to get through these things. And so, asking somebody else to do it is like, forget about it. Yeah, and it's very, very interesting that you say that. Because I think that even happens when it's your own child. So as a parent, I think you're split between like, oh, I want the best for my child. And I think they would be great at running the business. But also, where does that?

leave me and what does that say about me? So finding that it's so personal. We say family business, but I think it's so personal. Agreed. So let's talk about you start working in the business. You get your MBA. And now when and where does succession start to talk about? How old are your parents at the time?

What spurs them to say, OK, we're ready to start even talking about this? Because sometimes that is really hard fun. And the first thing you talk about it, right? It's such a good question. It's very good for me to reflect on this, too. How did it all come about? Because I think what was happening, so my parents are actually quite young. They're in their mid to late 60s, which I think is still fairly young. They're very energetic. They could still run.

Michael Palumbos (16:32.174)
this business if they really wanted to. What was happening was that the pandemic really showed us that where our business was positioned was actually really great. There was so much of a growth opportunity. And I think getting my MBA and really getting to spend that time where you're not working, but you're in classes that really open your mind. So I still stayed connected to a few technical consulting classes, family business.

discovered other new things, but I made sure I stayed connected to that. So I did learn about how to formally do a succession plan in a perfect world, which a lot of our family businesses don't live in, but in a perfect world, what it would look like. And again, thinking about the trends in the market, I was like, oh, my family business is actually sitting on a really big growth opportunity. So I think I went to my parents and was like,

I see so much potential for this business, but I think you guys are burning out. This is a very hard conversation to have, by the way. It took a lot of, like, how do I say this so I'm not hurting anyone's feelings, things, but also taking off the hat of the daughter and saying, this could go for another generation. So I really went to them and was like, I have a growth plan for your business, and I think you guys are just riding the wave of

previous success with all due respect. So they basically had one agency that they had like the best, I don't know if you've seen this in other first generation, but you get really close to a client. You really let them, you know, give you more and more and more and more work, but you're not really putting emphasis on anyone else, which led us to be 95 % of our revenue is concentrated in one agency budget during COVID. Wow. And.

that agency really needed to divert its funds, as many did. So then we were in a cash flow issue, which crisis really helped succession. Because then I came in and I said, not only can I help you do all the financials to get you out of your cash flow issue and kind of help manage that, but you shouldn't have been in this. So there is a crisis of leadership right now. So I think that was my entry point into the conversation. And then they listened. It took weekly meetings.

Michael Palumbos (18:55.768)
saying the same thing over and over and over again and showing that I had a plan. Not only that, but also, and this is a really important piece, I was very connected with their existing employees and existing team. So I think their existing team was also like, where do we fit in this? Where is this business going? And I think they needed someone like me to come in. So once my parents saw all of that, they were more willing to take the step back.

What was the timing on this from a standpoint of that first initial conversation to the point where they said, okay. Literally seven months. Like it was a lot of weekly conversations and it was on both ends, right? Like there was a little bit of me being like, okay, I'm so glad you guys are engaged with this idea, but I have some non -negotiables. And again, really difficult to take off the daughter hat.

I actually, I think I'm not a parent yet. I'm actually eight months pregnant. So I'm thinking about it now. And I'm like, you know, you never take off the parent hat. So I had the privilege of taking off the daughter hat, but they could never take that hat off. So I think also seeing my drive and my motivation for the business was helpful because they were like, wow, she could actually take this to another generation and that could be life -changing for her.

But it did, everything takes time. And I didn't, that first time I entered the family business in my mid -twenties, I didn't realize that you could get to where you want the business to get to, but it's not gonna happen overnight. And you're gonna have to repeat things over and over. As you say that, I want people to hear that again. You have to repeat things over and over. It's not just with your parents. It's not just with the succession conversation, but...

My gut says even to your leadership team today, you probably find that you need to repeat yourself over and over again. And it's not because people don't get it. It's because they need to hear it over and over again. They need to know that that's really what you mean as you're doing these things and that you really are behind all this stuff. And it's not just a flight of fancy today. Here's the flavor of the week kind of a thing.

Michael Palumbos (21:20.11)
Totally, totally. They need to know that you believe in what you're saying. And you only feel like you believe in what someone's saying when the messaging is clear, concise, and repeated. So it took us a while to get there. I think in the succession, a few things we had to negotiate on were, A, I was like, I just want to talk to everyone on the leadership team, that you have anyone at a senior level, and make sure that my vision aligns with theirs. Because.

I knew I had a huge culture clash that was about to start if I took over. And if I was like, hey, I want to change from this to this, that's the team that's going to get you there. So do we align on vision? That was number one. So I was like, can I come in and talk to all your people? And then the second one, which is a little bit of a touchy subject, again, you can never take the parent hat off, was if I'm coming into the business, then my brother can't ever come into it unless.

it's approved by me. So I love my brother is actually my best friend. We're super, super close. We're three years apart. And we talk every day, which people think is so interesting for a brother or sister duo, but we both run businesses. So we're also kind of colleagues. That being said, life is long, knock on wood. And I didn't know where that would bring us if I'm CEO and then one day,

something happens and he's like, well, this is my vision for the business. And parents can't take off the parent hat. They'd be like, hey, your brother wants to join the business. So that one was a little touchy. But hey, if you're not prepared to get personal and touchy, then you won't be able to run the succession. The worst thing that could have happened is that they say, that's a non -negotiable for us, which gives you the opportunity to say, I love you guys, but that's not gonna work for me.

we need to find somebody else then for the succession plan, you get the option, you know, and that's all these conversations are, is just opening up to say, what are the options? It's not that they're not negotiable. It's not that they're, you know, it's not about love or power. Sometimes it's about power. But it's, you know, I think that we make every decision sometimes too personal.

Michael Palumbos (23:44.654)
And it really needs to be just to understand this is just where I'm at right now. And if you can keep that flexibility to say, it's OK.

It allows people to make decisions and choices based on all the information. I 1 ,000 % agree with that because basically the conversations that we were having when I said seven months, they were exploratory in nature. And then they switched to becoming like, OK, now I think we have common ground. Then let's work on a plan. But when they're exploratory, it's good. You want to know them early versus, you know,

for me, I was coming out of business school. So everyone has an alternative. Like my parents had an alternative to hire, let's say, a more seasoned CEO. And I had an alternative to go build a career maybe in consulting or whatever I could have gotten right after business school. So the exploratory nature of the conversation was like, hey, if it doesn't work, it's OK. We have alternatives that could make it work. But we were lucky. And I think there's also sacrifices that come on both ends. So.

I really had to learn and I'm still learning to exercise a lot more patience. And then also starting to learn what you don't know and starting to bring on people who know what you don't know and feeling really comfortable and confident. And so what was interesting for us was that when I was talking to my parents about succession, I was really just talking about coming in at like a director or VP. I didn't really want to manage the entire firm.

And then I think at some point my mom was like, actually, your plan is great. You're super motivated and driven. And she's like, she calls me one day. She's like, if it was your brother, he would have been like, give me, give me the company. I'll manage it. She's like, are you just doing the thing where you're feeling like you need more years of experience? And I was like, maybe. So it was such a great mother moment for her to be like, it's, it's fine to be a woman in business. You can run, you can run this business. So, so we had it, we had an interesting kind of.

Michael Palumbos (25:54.328)
transformation there where I was like, oh, you guys want me to be like run the business? And I was like, how involved are you guys gonna stay involved? How involved are you? I wanted them to still be involved. Interesting. That's very, how long were they involved for? Are they still involved today? We did like, our plan was sort of to have them very involved in that first year. But what we did, what I was very specific of was I was the decision maker. Like,

to the team. The team would see that the decisions came from me. So if they had a really strong opinion that disagreed with mine, they would call me on the back end and we would talk it out. But it would never look to the team like there was a confusion of who was in management. But they were involved in the first year. In the second year, they were like, well, this whole traveling and hanging out with friends thing seems great, actually. So you know.

less involved. And then this year, I would say they're more like, really, really good for our culture. So they like attend team meetings, but zero things that are time sensitive, really will be on them. I do lean on them for any strong client relationships, they have any conferences they feel like going to in the year and just sort of being like ambassadors for our brand. So that that's been a good three year kind of plan for us. That's really worked out well for us.

Nice. Talk about through this transition, through this succession and transition, what were some of the hiccups that if you, in hindsight, if I could have just done that one a little differently or they might have done something differently. And then let's also talk about what were some of the things that we were like, like the mother moment that you just had. I think those, what were some of those other moments where you're like, this worked out really well.

Yeah, yeah, definitely. So many things I think I could do differently. It's crazy. It's only three years, but I feel like running the business has brought on a different sense of maturity that I have now that I didn't have then. So I don't think I appreciated the challenge of letting go as much. I really saw, I really just was like, there's such a big growth opportunity that I couldn't unfocus myself from that sometimes. And I wish.

Michael Palumbos (28:17.678)
I wish I sat with them a little bit and held their hands through what could be very difficult for them instead of just being like, I'm busy, I'm running the business. And now it's been a few years and I've shared that with them. So I've said like, oh, I wish I was more understanding of how difficult, like you ran it for 40 years. It was like their third child. So that piece is interesting.

I have corrected this a little bit now, but definitely finding the right balance between them still being connected with their team, but me still keeping the respect and the power in management so there's no blurred lines. That's a harder one. I don't know if we did that right or wrong. I don't know if anyone feels like that. That's a really difficult one in succession. But maybe being a little bit more mindful of that in the very beginning would have helped that.

transition to there were no blurred lines. I think I don't want to put this on the first generation because I think they're busy getting things done. But if they thought about exit planning and succession a little earlier in terms of what it looked like for them. So I don't think I had a really clear idea of what success or what was their plan. Sometimes I'm like, what was the plan? Was it?

just to keep going and sell eventually, there was no talk of that. I wish there was a little more transparency around that and that's difficult. Well, the world of exit planning has really started in the last 10 to 15 years, really started to evolve. We do exit planning and the two parts of exit planning are, do I have the mental readiness to retire?

do I have the financial readiness? And both of those, so it's a unique skill set to do exit planning, because it's not just a wealth management team. You need to understand what the world of potential exits looks like. And if I'm gifting the business to my daughter, and I'm not saying that's what happened, I'm just using this as an example, then it's one price, one value of the business, right? And I have to have all financial,

Michael Palumbos (30:42.222)
if I have a venture capital firm or a private equity group that sees synergy between my company and another company that they already own, and that synergistic value is gonna be 10x the other value. And so there's that whole spectrum of where it could go. That's exactly right. And I think what it is is there are...

you know, especially a first generation business is like, well, I need, there needs to be something for me to leave. So they're just like, I'm going to work, I'm going to work, I'm going to work. So maybe the planning part of it doesn't, doesn't really happen. So I think that, but I will say something we did well and Michael, I didn't know you at the time, so I couldn't have used your resources, but bringing on outside people to help with.

any sort of transfer or wealth planning or exit planning. So we had a team, we, you know, I definitely urged them and they had a good network and were very willing to bring on other people. Trying to do it all yourself is a recipe for disaster. So we felt very comfortable once we reached the agreement that like, okay, this is what we're gonna do. Getting like an outside valuation and things like that. Very helpful to lean on a team that you trust. So I think that was.

It's huge for us. Agreed. The team is everything. And in a transition, when you're doing something that you've never done before, like selling a business, you have to have a really good team around you. And it's not just, you know, it's estate planning and it's the business documents and buy -sell agreements potentially. And then you've got the tax side of everything. What's the right tax recipe to put this together? And like we said, do I have enough investments? Am I going to be okay?

30 years from now, to your point, your parents were really young. What does that look like? Yeah. And that was a big conversation. And it was very important for me too, to make sure they felt like just because the business ownership was changing, I didn't want their life to change. So how can the business help support them? What are the strategies that we can have owners and founder? The whole thing, but that all came from.

Michael Palumbos (32:55.884)
you know, the tax account, everyone on the outside who understood this way more than we did. So I think like, I think the last thing is really being super transparent. And that's not just stating what you think to the room. So it wasn't just between me and my parents, but internally to your team and externally to your clients. So change is difficult for everyone. It's a human, it's part of our human experience, but change when it feels like it's behind a closed door.

is straight up scary. So I'm very open. I feel like maybe that was a little bit of a difference between my parents and my leadership style. I'm very much like, if we had a good year, let's talk about it. If we had a bad year, let's talk about it. Like they should know everything, you know, as a need to know basis, but a lot of what I know, my team knows. And then also clients, they should be kept in the loop.

I was lucky that I called on a lot of the clients in my mid -20s. So it was like a name that they were familiar with, but they were kind of wondering like, is she gonna come back? Is she not? And having a clear communication plan with clients was also really, I think, helpful in the succession. I would tend to agree, like, quote hardly. So my succession plan was, you know, we had an associate that was,

supposed to be my succession plan or part of it as we were building out the firm. And she got an opportunity that I couldn't say no to. And we helped her to move out of the business, out of our firm. So she bought her own company in her 20s. Yeah, it was just an opportunity. It appeared out of nowhere kind of a thing. I'm like, you gotta take advantage of it. So we're in the process of...

rebuilding out the agency and the firm. And to your point, we know that we need to be transparent with the people that we bring in. We want our clients to feel comfortable to know that if Michael gets hit by a bus, what happens? And we have backup plans and business continuity plans in place, but we still have not taken the firm to that level where everything is.

Michael Palumbos (35:16.462)
All the I's are dotted and T's are crossed. So I totally understand what you went through and what you do now. Yeah. And it's OK to be in that position, I think, as long as it's open, you know, that, hey, we're figuring it out. It's on our mind. It's like we're not just ignoring that this is a huge issue that we're not talking about. So I think it's totally fair. And I think it also speaks volumes to your intention and your character that that was a good opportunity for one of your employees and you didn't.

I think that is a really big part of our family business and our values. So I like hearing that too. Yeah, I think, you know where that came from for me was I read a book called The Dream Manager, which I, Matthew Kelly loved the book. And he talks about that there may be an opportunity for somebody to grow and it might not be within your company. And as a good CEO,

You need to be open to that because it just, that person when they go out into the world is never gonna talk bad about your firm. Cause you just help them to advance their career even though you didn't have a spot for them right then and there and inside of your firm. And so growth opportunities from a good CEO are internal but it might also be external as well. Absolutely. And not to mention, I always say this to my team is like,

when I make a decision like that, I can sleep at night. So it's like all of a sudden you have this business and you have the weight of people's careers and even advice and things like that. And you wanna be the most wholehearted version of yourself. Cause when you close your laptop and walk out of that client meeting or go to bed, you wanna know that you did right by the people who rely on you. So I think we have a lot of situations like that. Cause again, a part of our businesses and staffing,

And we may have information from the client that someone who's looking to take a job and I'm like, Hey, if there's another opportunity for you that doesn't have XYZ limitation, cause I'm hearing that this one might take it because it means more for me for you to have all the opportunity. I'll, you know, we'll find someone else. So I'm, I'm with you on that. There's a, there's a weight that comes with management. Well, and you started this whole thing when we talked about.

Michael Palumbos (37:42.286)
that was the universe's sign that I'm supposed to come back to the family business. And I think we need to understand that when one of those, you know, touch points, when one of those decision points happens, that it's just the universe saying, this is what's best. And you might be surprised at what happens coming behind you, you know, when that decision is made, you put all that good karma out into the world and it's going to pay back. It'll be fine. And it's funny because in the, in the,

beginning years, I almost regretted. I was like, was that right? Like, should I have gone back or should I have stuck with building my own career? It's just, you question it so much. And then now where I'm sitting with the, you know, with looking at 10 years or 15 years, I'm like, oh, that was totally right because I couldn't have, I couldn't have done the succession if I didn't have the trust of the leadership team that they had and the clients. And I could, I needed to be a household name.

So, you know, can't just come in from, or maybe you can, maybe there's some people who've done it, but it would have been difficult. It would have been a more difficult uphill battle for us. Agreed. And it has been done, but you know, it's not usually in the situation where, you know, we just didn't have time to do it any other way, you know, something happened. And those stories are definitely out there. When you're looking at the next 12 months for RCI Technologies as the CEO and

You talk with your leadership team. What would you say are your top three priorities as you're moving forward over the next 12 months? Yeah, it's a great question. It's so top of mind because this is the end of the year and we've just been doing all of our end of year planning. I think we have two major ones. So one is we're very New York City, New York State concentrated. That's where our business started on the East Coast.

We have a few other agencies that we work with along the East Coast, but we're primarily there. So we are looking to expand in state and local business across nationally. And as we were talking before we were recording this, I am located on the West Coast. So we're trying to start up a different kind of division on the West Coast. So that's a huge, that's been a priority, but we're really revving it up this year.

Michael Palumbos (40:07.854)
Um, and the second one is to bring on a few more senior leaders. So we want to really expand and both of those go together, um, because we're kind of, we, we talk about our business in pods. So there's a New York city pod in New York pod and then a California pod. So we're hoping to bring on some, you know, more, more talent as we grow that can really help us. You know, get, get to that next level. Nice. What about.

when you look at what are your pains and frustrations as you look at the world today? Yeah, I have a lot. But one of the main ones for us has been, and I'm not actually sure how we're gonna come around this. So if any listeners have any ideas, please let me know. But it's very difficult to forecast our business because...

there have been so many changes in government budgets. So if you think about what was happening in New York, there's the crisis of the immigrants at the border. So then the funds have to be diverted. Again, that happened during COVID as well. So there's times that the government, there's something much more large at hand. So we may have a contract for three years, but then one year in, they're halting and diverting that money. So it is hard for us to forecast our business, which means for me, it's hard.

to bring on these senior leaders that I'm talking about. Because I'm like, well, how much are we, you know, what's the balance there? And then when I think about next year being an election year, we also have, you know, being concentrated in the public sector has its pluses, but these are a few of the things that when we think about forecastability and a lot of the times when there's an administration change, work just sort of stops and it gets really quiet, which.

you know, is not really fun when you're like, why is my business so quiet right now? So I think those two things are on my mind. Like, how are we better forecasting? And do we need to diversify more, whether it's at the different level of agency, so get more into like state, local, and federal? I think that's sort of the plan that we're thinking of taking. OK.

Michael Palumbos (42:26.094)
If you're having conversations with mom and dad today about the business, what are some of the conversations that you're having that maybe not everybody knows about that you'd be willing to talk about with us? Yeah, I would just blanket this by now. When we have conversations, they're always like, what do you guys, if I ask them a question, I'll be like,

I already made the decision, but what do you guys think about XYZ thing? And they think it's hilarious because I reached the point where I'm like, I actually just want to know what you would have done or what you think. But I have the confidence that I'm probably going to take the decision that I thought. So I would say it's been so nice this year having them more as advisors. And we're all feeling more confident in that role because they also need to feel comfortable and confident with.

hey, I might give my advice and then she might go a different way, which was not the case for three years. Usually it was like, if you're asking me a question, I'm gonna tell you my opinion and then I'm gonna follow up and see, did you take it, right? So I think our conversations are much more advisory and that's so helpful to me. I really rely on that. Maybe some things we're talking about are, yeah, I think that's like, that's mainly,

more just like they're more in like an advisory capacity. Awesome. What about, let's see.

what advice would you be giving to other people in, let's tell you, what advice are you giving to, you know, Gen 1, the first generation coming from the position that you're at, what are some of the things that you would say to them to help them start the wheels turning, you know, about this whole succession conversation? Yeah, that's a good question. I really like, I admire that my parents,

Michael Palumbos (44:32.75)
had the best intentions. So when they saw that my brother wouldn't have been happy or fulfilled in the family business, they, despite all the fear in their hearts, you know, that he's going to start a company from scratch and they know how hard that is. And he has two children under six. So they also know that the demands of that, I do, I do really love that they saw their two children for.

who they were and what they could be and didn't try to use the family business as a way to say, oh, this is your not just your right, but this is your duty or your obligation. But really, for me, they saw it as, oh, she could grow, not only grow the business, but she could grow through the business. And that could be life changing. And I think that is so selfless. So really dig deep when you're trying to think of, you know,

the rules you're making for the next generation, it might not be a one size fits all. Like my brother was pretty open from the beginning that he would have butt heads immensely with my dad. And then as he matured, my brother actually changed his story to like, I'm actually not the right person for your company, like Nisha is. So I think being open -minded to just different people's needs. And then the second I think we touched upon, which is like, even if it feels a little too early,

start jotting down some ideas of what success looks like for you and not just like a number you want to sell at, but like who is the, if you do want to sell, who is the ideal buyer that would make you feel like you did something good and like, you know, that's taking care of your baby. So I think just jotting those, if I knew a little bit more of what my dad and my mom wanted, it just could have been a nicer way to pave the way for the next generation.

And I'm thinking about that. I'm like, if this goes another generation, I'm going to be in the same position as them that I'm going to have to think not only how to grow the business and keep it, but also how to like, what do I see in future generations? So it's kind of an interesting place to be. And I'll add to that, you're going to have the complication of the succession plan from G2 to G3 is 1 ,000 % different than from your parents to you.

Michael Palumbos (46:50.446)
So you're gonna have to learn a whole new set of things. You've got some of them and they will be repeatable and you'll be able to utilize those questions. But I will bet you the business won't be the same. You're talking about two different pods, three different pods potentially. Who knows what that will look like. And there's, with all of those changes, it may not be, you could be an owner, but maybe you're not in control.

Yeah, yeah. I think about that a lot. I think that keeping an open mind and being very flexible to... I only plan in one to three years, basically, because anything past that to me is just like, I don't know. I don't know what doors will open. So I'm like one to three years, but I do try to think about if this were to go for another generation, like what... I was listening to some of your other episodes and it's like...

A lot of family businesses have rules against, you know, are around who can come in. And I was like, ah, it's just starting to like keep those seedlings in the back of my mind. Like what would be the preference? Cause you're right. It's the second generation probably formalizes a few more things. And that would be a little bit more on me. I have, if you listen, I have not had him on since we've talked about this, but Jeff Savlov is a family business consultant who was one of the first

people on there as a new mom raising a child in a family business. I highly recommend checking out his blog and getting his newsletter. He talks about the decisions that we make starting now, before the child is even born. Every decision that you make will impact their future, both positively and negatively. Which we No pressure. No pressure.

But it's one thing to be looking at our job. And we understand it's a learn on the job kind of a position. But if you can make some intentional actions and decisions early on, it's probably for the best. I would say I'm going to give that a listen. Yeah. I was a very much.

Michael Palumbos (49:14.862)
As intentional as I am about my business, I go back and I say, boy, I wish I could have done that parenting thing all over again. I think everyone feels that way. I think everyone feels that way. And I did the best with what I was given and where I was at. But now, because I've been involved with things like the Purposeful Planning Institute and been surrounded by all these other family business consultants, and I'm just a different person today,

you look back and say, boy, how much fun would that have been to talk about chores differently than maybe that we did or whatever those little small things are. Because it's not the big things typically, it's all these little small things that we were planting seeds to grow trees, right? Yeah, that's such a nice way of putting it. You're planting seeds to grow trees. But you don't know what you don't know. At that time, you just don't know. Of course.

In going through the last couple of years, transitioning from, I've got my bachelor's, I have my MBA, I worked in the business too, I now lead the business. What are some of the resources that you've leaned on and have found helpful in succession, but also just in running the business? Yeah, I would say the number one is being

part of some sort of CEO peer group or something where you get together, where you can really shed every single layer, every mask that you have to have on. Because let's be honest, that happens where you have to kind of play different parts for different people. I found that being in a group of other leaders, especially at my age and tenure, it's just so helpful.

Funny enough, a lot of what comes from being in a group like that for me has been wisdom around balancing personal life and professional life. So not forgetting that there is a world outside of work. And I think that really helped me start a family and really say, oh, you know what? I need to also balance my priorities. So there's a lot that can come from being part of a group of other CEOs who, A, have

Michael Palumbos (51:39.438)
maybe learned lessons that they want to share with you. And I think there's also lessons that I've shared in succession with them. So it's really, it's the strongest resource I have. It's better than any book you'll ever read, but I do love books. So also finding like, not just reading business books, because I do a lot of that and I enjoy that. But sometimes it gives you anxiety because it feels like you have so, you're like, yeah, I have to go implement this like,

one strategy and your team's like, oh, she read another book last weekend. So I think taking time to read some more, I really like the book, The Alchemist, which is more just about how the universe. I read that once a year. I think it helps me strengthen my resolve and we are where we need to be and we'll get where we need to go. And we'll keep our minds open to the doors that open. So I think trying to read some non -business, but maybe more like spiritual.

things helped me too. Nice. I just finished reading that again this year. So very funny. It's a good one. It's a good one. And it's an easy, you know, you just, every time you read it, I'm sure something new comes out of it, depending on where you are. And on my reminders every day at 4 p .m., the reminder of you are where you're supposed to be right now comes up because I need that daily reminder. Otherwise I try to control,

my destiny and where I'm going and make it all happen. And that gives way too much anxiety to think that I actually think I can control the cosmos and my universe. I just need to work as hard as I can. I'm with you. I had such a, I really had to work on, it's funny how much of running a business is like a mental game. Cause if you're not feeling your mental best, then you're not giving that to your team. And that's going down the layers of service and quality. And so I think,

I've really had to learn that, you know, you actually, and your mental game actually matters a lot. It's like an athlete sometimes. Agreed. I will throw a book that most people wouldn't put in there as a business book, but it is, it's a leadership book, but Brene Brown's Dare to Lead. I - Love it. Yeah. Love, love, love, love her. Yeah. How can you not love her? And it's just -

Michael Palumbos (54:03.886)
packed with some wonderful things. And one of my favorites in which I teach CEOs all the time is that we're, and I'm guilty of this all the time, is paint done for me. When this project is done, when this assignment is done, what does it look like? Not just what's in your head and assume that everybody gets it, right? But to really help them understand what it looks like. I learned this one the hard way because my husband tells me this is my moving the goalpost that I enjoy.

like, we'll get a win and I'll be like, oh, but this like that. And he's like, where was the goalpost when you said this was going to be a win? And I learned, I say, I learned it the hard way because when you're doing it to yourself, it's fine. You're, you're just damaging yourself. But I didn't realize that my words were creating a cycle with my team. And, and I was like, no, no, I want, I want them to celebrate their wins, but you have to model that behavior. You have to know what a win is and stick with it. So I think that that.

There's so many lessons in Dare to Lead. This is a really good one. I'll give you one other one that I haven't talked about in a long time that I think you'll really enjoy if you haven't read it already, but Liz Wiseman's Multipliers. I've heard people talk about it. I haven't read it. You'll love it. When you're done reading it, you'll send me an email. Yeah. And take her assessment when you're done reading the book. I'm writing this down. Oh my. I gotta write this one down.

It was definitely one of those moments. She talks about being an accidental diminisher. And it's like, I don't mean to diminish anybody else on my team, but then I started to look at the behaviors and I'm like, oh, Michael, this is not what you're looking for. And I'll give you my favorite one for me was being an entrepreneur, I might work a Friday night or a Saturday morning or.

Sunday while we're watching television. And if I'm zapping emails out to the team during the weekend or off hours, they're feeling less than, he's out there working, what's the message he's sending to me? And I really do want them to have work -life balance just because I make some different choices. I'm the owner of the business, right? So I get to choose what, you know, 70 hours or 80 hours I work. That's the benefit of being the owner.

Michael Palumbos (56:28.462)
Right. So that one's an interesting one to me because I felt this immense need to prove myself at all. I think this happens. I think I'm sure so many people on here as you're that you interview talk maybe have this feeling, but you just feel this need to override any thoughts of nepotism even when they don't exist. And sometimes that comes from you're like, I'm going to work 20 hours more than the next person. But then you're really causing so much other, you know,

downstream effects to your team. So I'm with you. I really had to change. I schedule send now. That was my solution for that one. So. Yeah. Especially being on the West Coast with an East Coast team, I'm very cognizant of like at a certain point, just schedule sending for the morning and they can get it in the morning. Very, very cool. This has been a great conversation, Nisha. I really appreciate everything that you brought to the table.

I have one other thing for you that anybody can do. We just find, it took us too much time in 23, but we did surveys of 72 CEOs. 46 of them or 44 of them were family owned businesses. And we wrote what we call the CEO playbook. It was a lot based on some of the questions that we talked about today. But when you take all of that stuff and put it together, people can go to the Family Wealth and Legacy website.

We just got the paper up there. Here we are December. So it's like next year, we're like, we need to get our 2024 paper out like June, maybe. But, you know, two things. One, I encourage you to download the paper and anybody else. And I'd love to interview you when we start doing the 2024, you know, interviews, because it's going to be an ongoing piece because life is dynamic. The world changes and, you know, different things are.

you know, happened differently for people. So it's, I think as CEOs, we need to band together and it's nice to know what other CEOs are feeling and doing and how are they handling things. So I'll share that with you. Absolutely. Yeah. I'd love to A, read the paper and B, definitely chat with you again, because this was awesome.

Michael Palumbos (58:43.198)
Nisha Balwani from RCI Technologies. Thank you, thank you, thank you for joining us. Really appreciate your time today. My name is Michael Palumbis from Family Wealth and Legacy in Rochester, New York. Appreciate everybody listening to the show and tuning in to another episode of the Family Biz Show. Have a great day and we will see you on the next episode. Take care, everybody.

 

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Michael Palumbos is a registered representative of Lincoln Financial Advisors Corp. Securities and investment advisory services offered through Lincoln Financial Advisors Corp., a broker/dealer (member SIPC) and registered investment advisor. Insurance offered through Lincoln affiliates and other fine companies. Family Wealth & Legacy, LLC is not an affiliate of Lincoln Financial Advisors Corp. Lincoln Financial Advisors Corp. and its representatives do not provide legal or tax advice. You may want to consult a legal or tax advisor regarding any legal or tax information as it relates to your personal circumstances.

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