In this issue
Some iconic names in family business are providing us with valuable lessons. As the adage goes, "There's a time to hold 'em and a time to fold 'em." The recent decisions by the Washington Post Company to sell its namesake newspaper and by the Forbes family to explore a sale of Forbes Media LLC show an appropriate concern for the long-term interests of their shareholders. Their decisions also show foresight and courage.
These are clearly large companies and household names, but the lessons they can teach us apply to family businesses of all sizes, in every industry.
Paul Sr., a true entrepreneur, spotted a need in the marketplace for a well-made widget. Little did he envision the wild success of his enterprise. With this success, Paul Sr. realized he could provide employment for his offspring and that one day the business might be theirs. The eldest second-generation sibling became a physician; the other three joined the business and over the years became successful managers in their respective departments. All of the four siblings married and had their own offspring.
Family businesses have become increasingly sophisticated over the last few years and are embracing best practices of other companies, both private and public. One way for family companies to add value is by incorporating best practices of public company boards. Public companies have improved many of their processes and procedures, partially in response to new regulations. Many of these practices can benefit privately held family businesses.
Normandy Farms in Foxborough, Mass., dates all the way back to 1759. Founder Francis Daniels, a French army officer (born François Guideau) who had been taken prisoner by a colonial privateer and brought to the Massachusetts Bay Colony, purchased the farmland. In 1971, in response to declining profitability of the family farm, Daniels' descendants established a campground on the site. Today Normandy Farms Family Camping Resort operates 400 campsites and generates $2.5 million in annual revenues.
For as long as anyone could remember, philanthropy was a way of life for the Jackson family (a pseudonym; the family's case is a composite based on several client families). Through their family foundation, three generations of Jacksons had found meaningful roles shaping and overseeing the family's philanthropy; the fourth generation was just getting involved.
After the terrorist attacks of Sept. 11, 2001, the family owners of Raia Properties Corp.—headquartered in Ramsey, N.J., about a half-hour from Manhattan's Upper West Side—searched for a way to turn their emotions into actions. Samuel A. Raia, 39, a managing director of the firm, lost his friend and college roommate, Patrick Aranyos, who had been in the World Trade Center's South Tower.
This issue features two examples of family councils at work. These family stories demonstrate how such governance structures can help improve relationships and encourage stewardship and engagement across the entire family.
At optics manufacturer Leupold & Stevens in Beaverton, Ore., Dave Donelson reports, the creation of a family council in 2001 sparked a chain of events that led to improved communication between generations as well as between the board and the family shareholders.
In the past century, Velvet Ice Cream has gone from a basement business to a historic site, from three flavors to a full range of frozen desserts, and from a casual family business to one with an established structure that includes a family council and a board of directors.
The company, which celebrates its 100th anniversary this year, is completing a transition from the third generation to the fourth.
The families who own Leupold & Stevens have spent more than a decade creating a governance structure that gives them the best of both worlds—a company with non-family management that more than holds its own in a competitive marketplace while reflecting and preserving the values of its family shareholders.