Close relations create different dynamics in commercial enterprises shared with spouses, offspring and siblings.
In Family Business Basics, Beatrice Wolper and Richard "Dick" Emens provide insights into running a multi-generational family business. The husband-and-wife team are partners at Emens & Wolper Law Firm. They cofounded the Conway Center for Family Business.
FamilyBusiness is one word to Emens and Wolper, cofounders of the Conway Center for Family Business at Ohio Dominican University. The husband-and-wife team coauthored Family Business Basics: The Guide to FamilyBusiness Financial Success, the textbook they use in a higher-level business course they teach on the subject at ODU.
"We use family business as one word because there's really no separation between family and business," says Emens. He and Wolper know firsthand the challenges of running a family business: The pair are partners at Emens & Wolper Law Firm at Easton. Wolper, the president of the firm, practices succession and estate planning for family business clients. Emens, executive director of the Conway Center, also advises family business clients.
The pair founded the nonprofit Conway Center in 1998. Named after lead patron James R. Conway (former owner of Marion Steel), the Family Business Center is a one-stop education, peer-to-peer networking and support center for family-owned businesses in central Ohio. The Conway Center is one of 25 major family business centers working in alliance across the country.
Besides that network of educational organizations, there aren't many places family-business leaders can turn for advice on the challenges associated with mixing business and family.
"Family businesses know they have unique issues because of family dynamics," says Emens, noting that neither trade associations nor government programs are focused specifically on family-owned firms. "Family businesses don't see their family dynamics issues being resolved or assisted by the usual entities that are out there helping businesses."
Borrowing from the adage that it's lonely at the top, leading a family business can be a doubly lonely occupation, says Emens. The CEO of any business bears great responsibility, stress and the task of making decisions without showing favoritism among staff. Executives in charge of non-family owned businesses tend to unwind by relaxing with family on evenings, vacations and the holidays. Family-business owners don't have that luxury.
"When that leader goes home, he or she is in a similar situation of talking business, not showing favoritism and being sort of isolated," says Emens. "They still have the stress of the business when they're away from the business."
The Conway Center hosts a CEO Peer Group for non-competing family business CEOs to come together and speak freely and confidentially with one another about their challenges. The Center also hosts a Leadership Development Peer Group, a Next Generation Peer Group and a Succession Planning Peer Group in order to provide a safe discussion space for what can be a touchy subject: How, when and to whom the family business will be passed along.
The family dynamic can be a boon rather than a burden if leaders are strategic in their planning and thoughtful in communicating those plans to family member-employees. The Conway Center's educational programs are largely centered on the growth of family-owned businesses, and strategies for transitioning leadership of those businesses smoothly to succeeding generations.
Adept family business leaders will spend their careers preparing the succeeding generation. Case studies of three high-profile Columbus family-owned businesses are included throughout this article as examples of successful succession planning. Each of these businesses has implemented some of the principles of owning, operating and passing on a successful family business.
If family business owners survive more than one generation, planning is critical, Emens and Wolper explain. Their book outlines the following key concerns to be addressed in family business planning:Strategic Planning
As a family business grows, the original plan of the founder will inevitably evolve, write Emens and Wolper. "The plan may expand as the business grows, leadership changes hands, and the industry changes."
Strategic planning will map out the business's evolution while maintaining the vision of the family's original entrepreneur.
Depending on the size of the business, a planning team of between two and 12 people should be convened to develop a strategic business plan. Emens and Wolper recommend the team meet for several out-of-office sessions over the course of one or two months to discuss the business mission, conduct a SWOT analysis and develop an action plan for the future.
Key management and family members must be an active part of strategic planning. The planning meeting can be led by the CEO, though it is often beneficial to hire an objective third-party family business consultant to direct strategic planning sessions.Succession Planning
"Planning who will be the next leader of the FamilyBusiness is often the most difficult decision that members of a FamilyBusiness will make. Implementing that decision can be even harder," write Emens and Wolper. They recommend forming a multi-generational family business council or board of directors to weigh succession options and select the best family member or members to lead the business when the elder generation retires.
Developing potential family business leaders is a lifelong process. It begins with instilling young family members with positive experiences of the family business and continues through succession planning and mentorship between succeeding generations of leadership.Estate Planning and Wealth Transfer
Financial planning is among the most technically challenging aspects of family business succession. Leaders will first need to plan for a financially stable retirement for themselves and their spouses. Next, Emens and Wolper write that, "Estate planning and wealth transfer techniques should be utilized to see that the appropriate family members end up with majority ownership and maintain management of the FamilyBusiness." Throughout these financial planning steps, the goal will be to "treat all family members as fairly as practical."Long-term Planning
Only a small percentage of family-owned businesses succeed into the third and fourth generations. Those who do have carefully planned for that long-term success, write Emens and Wolper. They recommend scenario planning as a method of developing strategic five-to-30 year business plans: "Comprehensive analysis of many factors is done to develop several alternative futures, which are then described in story format, giving the family and others in the business understandable pictures of what can happen."Sale of the Business
Not all family business owners decide to pass the business along to family members. Some may decide to sell the business, perhaps to their children. Emens and Wolper recommend family business owners ask themselves the following questions when considering selling their businesses: How much retirement money will you need? Can you sell the business for enough money? How will other family members feel about the sale? What will you and your family members do after the sale to make a living?Day-to-Day Challenges in 2015
In addition to the issues outlined above, family-owned businesses also face daily operational challenges. While the tough economy posed a challenge over the past few years, 65.5 percent of Columbus-area family businesses planned on hiring in 2014 and beyond.
A Conway Center survey conducted in March 2014 indicated that family business owners were "on-balance optimistic," says Emens. "We recently contacted a number of them again. An even larger percent are optimistic about business for (2015) and optimistic for hiring people, but are concerned with, can they find the people they need?"
Conway survey participants reported that their number-one business challenge is finding qualified employees. Chris DeCapua, owner of Dawson recruiting and staffing agency, says that family businesses tend to have particular hiring concerns in comparison to non-family owned businesses.
"When you work for a family business, there's a sense of legacy," says DeCapua. "They want people who understand the hard work and years of sacrifice that went in to establishing and creating what they have."
Though roughly 95 percent of Dawson's staffing clients are non-family firms and corporations, DeCapua speaks from experience-both business and personal. He and his brother, David, took over their family business from their dad, Joseph, in 1999. The culture of their family business mirrors the culture of their family.
"(In) my family, we kid, we poke fun at each other. We kind of have that culture here, too," DeCapua says. The loyalty that goes along with operating a business with family members often translates into loyalty for non-family employees also, DeCapua says.
He, his brother and their executive team retain employees by reinvesting in their business facilities and keeping lines of communication open. "I count on these people to help me and help my family achieve our dreams, so the relationship between employer and employee is a little different," says DeCapua. "It's 'let's be successful together. I don't want you to go anywhere.'"
The loyalty inherent among the members of family-owned businesses can be one of their strongest assets, says Emens. "Sometimes that loyalty element can go awry because of family dynamics, but when it works it's clearly an advantage. You're working with people you really care about, and you care about their health and well-being in addition to making enough money to have the business be successful."