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The Turners of Manasquan, NJ, consider it a privilege to operate
their family-owned bakery business. "This business is more
than doughnuts; it's us," says Jim Turner. "We all share
in the awards that my father has won over the years."
The Schundlers of Edison, NJ, have had the family business in
their blood for generations. Their grandfather, H.C. Schundler,
founded their construction material business and their great uncle,
F.E. Schundler, founded an aspect of the entire industry. F.E.
then set up his nephew, Otto Schundler, in the business in 1951.
"The real challenge of my generation is not just to keep
the Schundler Co. current in technology and markets, but most
important, to develop a tradition of passing the company from
one manager to the next in a timely manner."
The legacy. For some family businesses, it is the primary motivation
for keeping a company alive. F.E. Schundler, Jeff's great uncle,
may not have intended to create one when he began the business
over 70 years ago, but that is what developed over the years.
In fact, Schundler's story was probably just like any other entrepreneur's.
He had one good idea, or could not find a job or get along with
his boss, or was stubbornly independent and started the company
from scratch. There was not any profit for years, let alone any
legacy to protect. The burden would be borne by future generations.
Says Jeff Schundler, the company's CEO: "We each feel an
obligation to improve the business. It doesn't matter what our
titles are. If your name is Schundler, you give just a little
bit more."
Put yourself in the position of being the heir of your grandparents'
business. If you do not want to do that type of work, the legacy
is at risk. Could you handle the guilt? If you could, would your
relatives let you?
Some families know the scenario all too well. When the time came
to plan for succession, none of their children wanted to run the
business, so they spent the next several years looking for buyers
and working with the estate planning experts to limit their tax
obligations as they transferred assets to their children and the
company to others.
"I'd be lying to myself if I said that I'm not disappointed,"
says one owner, who grew the company from $150,000 in revenues
in 1950 to $4 million in 1980. "We took care of our family
financially, but when the company passed to someone else, it was
as though part of us died."
To many, having a family-owned business was like having another
child. It did not feel right to stop nurturing it.
"I feel very gratified knowing that my son, Doug, wants to
continue my business," says Steven Gyure, president of S4J,
Inc., a New Brunswick-based manufacturer of specialty lures for
the medical industry. "Years ago, I wasn't sure any of my
three children would want to take over the business, but as Doug
became an adult, it became obvious that he would make an excellent
president some day. It's like having a piece of yourself live
on well after you are gone. It's been fun to see a preview of
what the future will be like."
To many entrepreneurs, having a family business goes beyond how
many relatives are involved in the company. Art Crowley, Sr.,
president of Garon Products Inc., thinks of Garon Products as
a family business because of "how we all depend on each other
on a daily basis." One visit to Garon Products' Wall headquarters,
and you know what Art means. Except for some physical clues, like
similarly shaped noses, you might not know that Art Jr. and Mike
are the only other Crowleys in the business.
Do not tell Vinnie Azzenza, Bob Hornak, and Chris Grant they are
not relatives. They will not believe you. Even if suddenly no
Crowleys came to work, these managers would press on. The Garon
way transcends Crowley.
Because of such very personal feelings that become associated
with family-owned businesses, offspring sense their parents' desire
to have the business live on, even when their parents have not
had an opportunity to make their desires known. Many try very
hard to keep the business in the family, even when they had something
else in mind for themselves.
Take Ozone Pure Water for example. When the owner, Marty Langweiler,
died in his early 50's, none of his children were available to
run the business. Frankly, no one was expecting him to develop
diabetes with major complications. To keep the business in the
family, his daughter, Michal, left her teaching position in northern
New Jersey and relocated to Ozone's Atlantic County base. She
built the business by selling their products in the highly competitive
casino industry and by expanding the product line into varieties
of bottled water and coffee service. She did not see running Ozone
in her long-term plans. When Ozone hit $1.2 million in gross revenues
in 1986, she sold her shares to private investors from Philadelphia.
Although Michal still holds a minority share of the company -
now Keystone Pure Water - most of her time is spent in the real
estate business and raising two very active boys. Does Michal
regret letting the family business go? John Henry, one of Keystone's
major share-holders, says that "Michal did what she had to
do."
She knows that her father would be proud of what she was able
to do with the business prior to selling it. The worst thing she
could have done is to just let the business die. She felt her
father deserved better than that.
On the other hand, some people view having a family-owned business
as expanding the options for their children, but do not want their
children to feel like the business is another obligation trapping
them. Take Marpac Industries. Over the past 24 years, Don and
Sue Sykes have built the Waldwick-based Marpac into a high quality,
specialty container manufacturing business, employing 70 people.
Their customers include several original equipment manufacturers,
and they hold numerous patents. Although their 28-year-old daughter
is not currently employed by the company, their son is a employee.
At this point, it is not clear when or if either of the Sykes
children will want to assume a meaningful position with the company.
So for now, Don and Sue keep their options open. "If our
children want the business, it's here for them. If not, we have
created something very special at Marpac," says Suzanne Sykes,
Marpac's chief executive officer. But knowing the Sykes' children,
they would probably make sure that Marpac continued if something
were to suddenly happen to their parents.
The Sykes know that keeping their options open is easier said
than done. Every few years they interview their children to learn
about their preferences, not make assumptions, and renew their
offer of an opportunity share in the business. "But we don't
risk the future of the business waiting and hoping that one of
our children will want a key role. We have to keep going. At some
point, we will have to make commitment to non-family members,
because we feel that we owe something to people who have been
with us and helped make Marpac what it is today," says Don
Sykes.
When the Dalys of Suburban Services in Holmdale wanted to retire
last year, they reviewed their books. It soon became apparent
that they and their children could make more money if they sold
the company rather than expect their children to operate such
a tight-margin business during a recession. Like the Sykes, they
had kept their options open. Their heirs will benefit from their
hard work without the obligation of running the company.
Family Business magazine defines a family-owned business
as having at least 25 percent of the ownership within a given
family and having at least two family members involved in running
the company. Of course, this means that long-time family-owned
companies like Campbell's Soup Co. are no longer family-owned
businesses. The three heirs of the condensed-soup inventor, John
T. Dorrance Jr., control 32 percent of Campbell's stock, and another
27 percent is spread among six other family groups, but no one
in the Dorrance family actually works at the company. Those of
us with businesses in Camden County know that most people have
not quite let go of the image of Campbell's as a family-owned
business, despite Family Business' official definition.
Recognizing that others have a variety of definitions for a family
business may help you prepare for the succession planning.
If you value tradition or are having trouble letting go, one important
part of your family business may be leaving your mark. If so,
you might want to consider filing for trademarks and patents,
licensing or franchising, writing a book, doing public speeches,
or being nominated for prestigious awards - like the Malcolm Baldridge
Quality Award - to help you meet those needs. You never know what
your offspring will want or whether they would operate your business
the way you would.
If you see ownership of a family business as a way to provide
for your children's future, it might be time to view passage of
assets without obligation as a tremendous advantage and gift from
you. What a marvelous head start the Sykes gave their children
by teaching them about financial realities, meeting needs, following
through and focusing on quality. Their children will inherit the
financial value of the business since they are planning ahead.
The ownership of the business need only pass through their hands
for a very short period of time for them to realize the value.
Plus, it is important to remember the Dalys' option of selling
the business at a good time. It would not have been any favor
to their children to hang on too long.
Apparently Michal Langweiler concluded that her father's goals
had not been quite realized. Sometimes family carries an obligation
to play out what has been started - but not necessarily to be
stranded by it once that objective has been accomplished.
The Schundlers, Turners and Gyures are unusually lucky that their
heirs genuinely wanted to satisfy their business goals by staying
involved.
All-In-The Family Business Tips
Known as “The Growth Strategist”, Aldonna R. Ambler, CMC, CSP helps technology-driven companies, professional service firms, and construction-related/distribution firms achieve accelerated growth with sustained profitabilitysm through a combination of speaking, consulting, executive coaching, authorship, and growth financing. Her clients seek a minimum of 50% growth/year, with the majority achieving between 100 and 200%. She has executed an ESOP, grown multiple international businesses, won just about every major award an entrepreneur can win, provided expert testimony on economic growth at over 30 legislative hearings, conferred with 3 different Presidents in the Oval Office, and published 2 books and over 85 articles. Aldonna is the national (USA) “Woman Business Owner of the Year” for 2000 and was recently awarded the Office Depot “2001 Businesswoman of the Year”. Aldonna Ambler can be reached at 1-888-Aldonna (253-6662) or at www.Aldonna.com.