In this issue
For some family businesses, finding success in a niche food industry may seem like rolling a boulder uphill. Not so for the owners of Golden Island Jerky in Rancho Cucamonga, Calif. The company is on a roll, all right, but of a very different nature. While president Anna Kan declines to disclose revenue, “it has increased roughly 300% since 2008,” she says. The company has close to 200 employees and produces more than a million pieces of jerky per week.
In addition to general business challenges—like the economy, competition and the need for product innovation—family-owned companies must contend with issues unique to family businesses, such as the need to preserve harmony. But potential family disagreements need not threaten the survival of the business. Early and proactive planning before the issues arise enables family businesses to successfully navigate internal and external pressures.
Talk about the “green” trend to the Newman family, and they’ll smile and say it’s about time the rest of the world caught up with what they’ve been doing for nearly 100 years. Newman & Company, founded in 1918 and based in Philadelphia, is Pennsylvania’s leading recycler and supplier of rigid paperboard. Company president Bernard “Bud” Newman, 72, is extremely proud that every product that goes out the door on a Newman truck is made from 100% recycled materials. No tree has ever been cut to make a Newman product, the family says.
As his aunts and uncles left the boardroom, John feared for the survival of the family business he headed. They had voted down another investment that would have enabled the century-old candy business to compete more effectively. The family seemed to care mostly about receiving their shrinking dividends. Yet the plant used production machinery built by John’s great-grandfather. Marketing and advertising had ground to a near standstill. New products were not even on the agenda. Why, John wondered, did the family board not listen to him or his like-minded cousins?
As a teenager working at a pizza restaurant, Jim Grote got his first lesson in customer service. He noticed that one of the owners was generous with pizza toppings and the other stingy. “The one that made good pizza and wasn’t stingy with toppings, his nights were busier than the other guy’s, who watered down sauces and stretched toppings,” Grote recalls.
The value of treating customers well stuck with Grote. This year marks the 50th anniversary of Donatos Pizza, the company that he built, expanded, sold and then bought back.
In the course of my practice, I often run into situations like this: Robert and his wife have a net worth of $20 million, of which $15 million is an interest in a family business. Their heirs include children, grandchildren and great-grandchildren. If upon the death of the surviving spouse they leave everything to their children outright, the family business and any unspent assets may again be exposed to estate taxation at their children’s demise. The assets will also be exposed to dilution if their children divorce.
Metropolitan Vacuum Cleaner Company will celebrate its 75th year in 2014. The company may not have a household name, but it has created markets in diverse industries while doing what it does best: making products that move air.
Israel Stern had been a door-to-door vacuum salesman for national brands when his father-in-law gave him and his wife, Pearl, $50 to launch their own business reconditioning and reselling vacuums.
A primer on tackling sticky issues
Managing Conflict in the Family Business
By Kent Rhodes and David Lansky
Palgrave Macmillan, 2013 • 107 pp • $23
The most harmonious enterprising families are those who have learned to manage conflict rather than avoid it. This concise guide, written by two members of the Family Business Consulting Group, offers a menu of conflict management tools based on the authors’ knowledge of psychology, management science and corporate governance.
Generation of family ownership: Third.
Company description: Our company, a bakery goods manufacturer and service and solutions supplier to the baking industry, conducts business in more than 70 countries.
Number of employees: More than 4,000 globally.
Years with the company: 25.
First job at this company: Washing baking pans at the R&D lab.
At what age? 17.