In this issue
In the past 50 years, many family businesses in a variety of industries have become extinct, or at least endangered species. The odds of a family business lasting three generations have always been long, but the rate of product adoption and obsolescence today makes this dream even less likely. For example, it took 50 years for the telephone and the automobile, introduced in the late 1800s, to gain 50 million users worldwide. Compare that with the cell phone, introduced in 1973, and Skype Internet calling, which debuted in 2003.
Bradford, Pa., is not a place where one would expect an international icon to be made. It’s located about 130 miles northeast of Pittsburgh, near the New York border, where the landscape is lush with trees and wildflowers, the deer-to-human ratio weighs heavily in favor of the deer and tourists driving along historic U.S. Route 6 can travel for an hour without seeing so much as a single dwelling or gas station.
Most family businesses and single family offices around the world are still dealing with the aftermath of the financial crisis. Many are confronting an interesting problem: a significant shift in allocation of the family’s total wealth between operating assets (the business or other mostly illiquid investments) and financial assets (the family’s liquid investment portfolio).
During a recent visit to an airport, I realized that there are many similarities between a pilot flying a plane and a next-generation business leader taking on meaningful responsibility in the family firm. While it’s exciting to be on an airplane as it accelerates into its takeoff, I’ve been told that this is one of the most dangerous parts of flying. Similarly, the way a next-generation member assumes meaningful responsibility in a family firm has implications for the future leader’s long-term success in the organization.
A slim volume packed with wisdom on family enterprises at all stages
By Joachim Schwass, Hakan Hillerström, Holger Kück and Colleen Lief
Palgrave Macmillan, 2011
157 pp., $90
Though Wise Wealth is slim (less than 200 pages) and trim (5 x 8 inches), the book is chock full of sage advice on managing a family enterprise and sustaining wealth over -generations.
History of family ownership: My parents, Vrest & Mildred Orton, started the company in 1946 with a small catalog mailed to their Christmas card list and a store in the picture-postcard hill village of Weston, Vt. My father’s inspiration came from growing up in my grandfather Gardner Lyman Orton’s store in North Calais, Vt., in the early 1900s. We are still a family business with two stores, but the vast majority of the business derives from catalog and web. I became president in 1975 and built the business with help of our first non-family CEO, Bob Allen.
The vast majority of U.S. family business owners polled in a recent survey believe policymakers, the public and the media need more education about family businesses’ contributions to their communities and to the economy. And the focus of such educational efforts, survey respondents said, should be on estate, gift and generation-skipping tax policies and business tax incentives.
Our Family Business Magazine team recently hosted a very successful conference in Orlando with Stetson University’s Family Enterprise Center. More than 130 attendees and speakers discussed important topics such as family and business governance, legacy and wealth management. My personal takeaway was that effective governance, both on the family side and on the business side, provides a distinct competitive advantage in the marketplace. This becomes even more important in later generations.