In this issue
Lyman Orchards, now entering its 10th generation of family ownership, this year celebrates 275 years of progressive stewardship of the agribusiness founded by John Lyman and his wife, Hope, in 1741. Today, the 37-acre parcel the founders purchased in the heart of Connecticut has grown to 1,100 acres, and the enterprise is one of America's oldest family companies. The property supports a diverse range of businesses guided by a progressive hybrid family/non-family management structure.
Many well-established family firms are seeking ways to generate new streams of income independent of the core business. Despite the longevity or success of the family enterprise, inherent risk is typically tied to the legacy business—which also happens to be where most of the family's wealth resides. What if there is a catastrophic business interruption? What if the supply shuts down? What if new technology or global competitors upend a once-defensible position?
Doctors are advised not to operate on their family members, and there is good reason for this: Judgment can get skewed and the result can be less than ideal. Likewise, a director should not have an overly emotional tie to the company he or she is in essence "operating" on—whether that tie be a family connection or financial dependence. If there is one thing that great boards have in common, it is that they include truly independent directors.
We regularly meet family leaders who are concerned about how the upcoming generation is bonding, how family members are interacting and how wealth will affect family ties. They worry about how, and even if, the family will survive the inevitable challenges and make the most of available opportunities. Successful family leaders learn how to apply resources and open their minds to a range of perspectives. Above all, they ask deliberate and relevant questions.
Family firms account for two-thirds of all businesses around the world, and an estimated 70% to 90% of global GDP annually is created by family businesses, according to the Family Firm Institute. Whether the business in question is a $3 million operation or a $3 billion multinational enterprise, family business success and continuity matter—not only to the family but also to their employees and to the country's economic health.
Peter Begalla, Family Business Magazine's conference and education director, recently came across a March 1951 publication issued by the U.S. Department of Agriculture focusing on "Father-Son Farm Operating Agreements."
As was common at the time, the pamphlet reinforces gender stereotypes; daughters, mothers and wives are not referred to as farm owners. But readers who can overlook the sexist references will find advice that's still pertinent 65 years later.
Here are some excerpts:
Why a father-son farm-operating agreement?
Bob Levy, 62, is the fourth-generation owner of Harris Levy, a high-end linens store on Manhattan's Lower East Side. He holds down a full-time job as a paramedic. He's been juggling the two vocations for more than 30 years, at St. Vincent's Hospital and other organizations, while his wife, Meryl, 60, manages the store. Meryl has worked at Harris Levy since she and Bob were dating in college.
The Business: Francis Xavier Hillenmeyer, born in France, emigrated to the United States and eventually settled in Lexington, Ky. In 1841, he planted fruit trees from his native country. The company's nursery operation still exists in the same location, notes fifth-generation president Stephen Hillenmeyer.
Generation of family ownership: Fourth.
2014 revenue: $75 million.
Number of employees: 450.
Years with the company: 28 full-time. After college, I worked five years for two Fortune 500 technology companies before joining the business.
First job at this company: I was a summer intern—order operator.