Written by Emily Ballard | Photos by Anthony Harden
Starting a family business can be challenging; maintaining it can be even harder. Think about the reasons behind starting a venture such as this. Most companies start with an idea or an “aha” moment. Wouldn’t it be great if we could work for ourselves? What if we could make money doing this? And once this conceptualization becomes a reality, business is booming, success and fulfillment attained, a legacy is born. When the time comes for the founders to pass their baby on to the next generation with dreams of keeping it in the family and maintaining their vision and hard earned enterprise, what if that next generation doesn’t want it?
[dropcap]O[/dropcap]r what if all the siblings want it? What if they want to change it or sell it? This is when many idyllic family run operations crumble, businesses fail, and legacies fade into the abyss of forgotten ideas and failed endeavors.
Statistically speaking family business succession rates are low. Only about 30% of family businesses survive to the second generation, 13% into the third generation, and only a mere 3% carry into the fourth generation or beyond, according to the Family Business Institute. But it’s not all doom and gloom. There are some real success stories both nationally and locally that defy these dire figures. And, despite an unstable economy there are many family businesses that are thriving and growing, and resources abound for aiding those families through the process of transitioning to the next generation. So don’t give up hope just yet. With the proper tools, the keys to the kingdom can easily be passed down to family members for years to come and generations to follow.
80% of the world’s businesses are family owned
family businesses account for 50%of the gdp (gross domestic product)
35% of the fortune 500 companies are family businesses
family businesses are responsible for 60% of the nation’s employment and 78% of new jobs created
over 25% of family run companies expect the next CEO to be a woman, and over the past five years women owned family businesses have increased by 37%
60% of family business owners are unhappy with their succession plan or do not have one at all
62% of business owners believe it unlikely that their business will remain in the family by the next generation
“We are seeing that family businesses are really the backbone of the economy; it’s not larger companies and corporations. Sure, they hire hundreds of people, but it’s these smaller companies all across America that are lasting and surviving,” says Cindy Clarke, executive director of UNC Asheville Family Business Forum.
Cindy’s office sits at the end of a long hallway in a building on the UNC Asheville campus that the Family Business Forum shares with the Department of Advancement. Cindy is energetic and passionate about what she does. As she goes through her list of members, she speaks about each company as if they are her own family. She enthusiastically points to business names and gives detailed accounts of brothers and sisters that inherited the business after unexpected deaths, patriarchs with high expectations for their successors, and countless stories of successful business transitions.
She is from Buncombe County and has been with the Family Business Forum for eight years and is a plethora of knowledge when it comes to companies in the community and their history. Cindy feels the forum fits nicely into UNC Asheville as an educational program. She says the object of joining is not to network, although this does frequently happen, but the primary reason to join is to learn.
The Forum is a membership based organization, offering ten seminars a year on topics relevant to family businesses, such as panel discussions on effective succession planning, speakers on how to best work with your spouse, and a workshop fleshing out the realities of relationships in the family business.
“Just because they are doing well doesn’t mean they can’t do better. They need to seek out resources. And ‘all you need is love,’” Cindy shakes her head. “There is a lot more needed than love and you have to plan it out. It really is in the humility of the current person in charge. It really comes down to that, particularly if the guy in charge now is the founder. That’s like the first love and their identity is wrapped up in that. And giving up the business is like giving up a bit of themselves. That is the number one problem with succession. Lack of a plan and Dad can’t get out of the way.”
Working with family can be complicated, emotional, and just plain messy. Think about sitting around the dinner table or holiday get-togethers and all the opinions and strong personalities that encompass these events. Home relationships carry over into work relationships and this can be dangerous when money and business are involved.
Every business succession is different. For some families it is what Cindy calls an “unspoken rite of passage.” It is expected and assumed. For others it is an unexpected turn of events. There are elaborate succession plans and there are more naturally progressing plans, but it all starts in the discussion.
“It really starts within the family. Are we ready to have the discussion? And it is hard to have that discussion. The Forum is a great way to start the conversation,” Cindy says. “Being part of an association is huge. There is definitely power through numbers and shared experiences. That’s really powerful.”
A key to success is defining the roles within the company and within the family. This can be quite the challenge. Traditionally the son would inherit the business as the “person in charge”, but what has worked historically may not be appropriate for today’s company. More and more women are breaking the mold and taking the reins in leading the progression of the family business.
A Succession Unfolding
Speaking of strong women in the workplace, enter Leah Wong Ashburn, vice president of Highland Brewing Company. Oh wait, correction, as of January 1st, Leah will be assuming the role of president of the company, a title held by her father, Oscar Wong, the founder and owner.
When Oscar started the business it was more of a hobby. He had sold his engineering company and moved his family to Asheville due to his love of the mountains, fresh air, and the culture of the people here. Leah refers to this as “a failed retirement”. Having an on-the-go personality, in 1994 he and two brewers started what they thought would maybe be the neighborhood brewery. This failed retirement would soon become wildly successful.
Keep in mind that at this time there wasn’t a craft brewery on every corner. This was more or less unchartered territory, and the Wong family had no idea that they would be at the forefront of what would later become a booming industry in Western North Carolina.
But tracing back to the beginning, we have an experimental new business and a 24-year-old Leah at a crossroads in her life, trying to figure out what she wanted to be when she grew up.
“When he started the brewery I was there drinking beer, not making money, and thought free beer would be great. So I asked him for a job, and he said no and kind of told me to find my own way,” Leah recalls.
She says that he forced her to find her own path, and she found a way to use her journalism degree in a unique way, through an opportunity in the publishing and printing industry and combined it with education. She worked for a yearbook company and used her teaching skills, skills she didn’t know would interest her, in going to schools and teaching classes on the computer programming side of it.
“It was so weird and so unplanned. Sometimes the less sexy the job, that’s where some real opportunities are.”
Finding her niche market, she ran a successful one person business for 13 years, transforming a sales job into an educational job, and finding fulfillment and independence she didn’t even know she was looking for.
Sometime midway through her career, her father came to her and said: “You have learned a lot and are doing well and you have great skills, what do you think about coming to the brewery?”
Leah was a huge proponent of the beer and the company, but was enjoying her successes and felt it wasn’t the right time. It was her turn to say no to the prospect of working for the family business. The topic would come up many more times over the years, but Leah still wasn’t ready to take the plunge.
[quote float=”left”]“It was so weird and so unplanned. Sometimes the less sexy the job, that’s where some real opportunities are,” says Leah Wong Ashburn.[/quote]Eventually the industry she was working in changed and evolved and her love for her job began to wane. She felt the urge to be part of something bigger and after meeting her husband, who enthusiastically encouraged the change, she was ready. She cites the importance of priority and timing as the key factors in her decision to make the move.
But she didn’t fall into a nepotism role in the company from the beginning. In fact, she started out in a part-time sales position based in Charlotte. Two years ago she took on a marketing role here in Asheville and feels there was a perfect gradual transition to find the right fit for her place in the company.
Leah says that as she steps into her father’s role she has made him promise her that the daily activities would not change and that he would still be there. He has no intention of going anywhere and will be acting vice president and board chair, still very much a part of the company he has grown to success.
“He has so much fun he is not going anywhere. He can continue to do more of the stuff that he loves and less of the stuff that he doesn’t want to do, and he deserves that. I can’t fill his shoes; I have to fill different shoes and, with the team that we have built, I have all the confidence in the world that the company will be in great hands for the next 20 years.”
As far as succession planning goes, Oscar really did his homework in talking to accountants, bankers, and lawyers to ensure that all their ducks were in a row for the transition. Leah joined the Family Business Forum to affirm that they were in fact proceeding in the right direction. She says the most important part has been open communication about the financials and the tough business decisions, eliminating any surprises, and remembering that you are not just dealing with an employee but also a family member, and that can be an emotional thing.
“If you have the opportunity to, let folks find their own path and work outside the family company, and then let them come in when they are ready and when they want to. If that time has already passed and they come into the company in an almost automatic process, assess it really carefully because in the long run it may not do the family, which is the most important thing, a good service. It has been neat that I get to work with my Dad as a peer. I really appreciate that opportunity, and I think I appreciate it more because I worked in other places.”
There aren’t that many second generation craft breweries in the country and there are even far fewer female run second generation, if any. “Just a wee bit different” is the company motto, and Leah and her family seem to be successfully adhering to this concept.
A Community of Family Businesses
There are plenty of national companies that are family run, think Ford Motor Company and Campbell Soup. Crane & Co., a national stationary business, is seventh-generational. Woolrich Company is currently led by the seventh and eighth-generation family members.
But if you look closer to home you will find hundreds of family led companies that have been passed down from generation to generation right here in Western North Carolina. MB Haynes Corporation is a company that has changed hands from father to his two sons, and currently employs the third generation family members. N.E. Cannady III (Buzzy) and his brother Brett Cannady have followed a different path for the business and established an ESOP (Employee Stock Ownership Plan). As the business grew to its almost 540 employees, the brothers felt they needed to create an opportunity in which the family members are still involved, but also a means for the family to be able get out of the business when they want to without just trying to sell it.
“My father invited us to work for the business from the ground up. I admire my Dad for letting us get involved and trusting us. The business has been big enough to keep two brothers and their families financially stable, and, as the company has grown and become more complicated, we feel the ESOP is the right decision for the long term plan of changing ownership,” says Buzzy, president and CEO.
Wick & Greene Jewelers is another perfect example of a family business that has persisted and flourished over its almost 89 years of existence, a longevity as rare as the unique jewelry that they provide. Much like Leah’s experience with her father, fourth generation family member Eva-Michelle Greene was encouraged by her family to establish her own career before becoming a partner in the successful jewelry business.
Eva-Michelle followed in her father’s footsteps, as well as her grandfather’s. Starting at an early age she showed interest in the business and followed her passions through education and experience, and then came full circle to bring that knowledge back to her home base and family birthright.
“The fourth generation of anything, let alone a local business, is no longer commonplace. I am extremely grateful to the three generations that precede me,” said Eva-Michelle.
A common factor that is essential when working with family and the evolution of the business is communication. Kemper Brown Jr. knows this first hand. He enjoys working with his father at The Electronic Office, a local company that provides network support and technology advice to businesses. Kemper’s father is still very much active as president of the company that he founded, but inevitably one day he will relinquish his position, hopefully into the hands of his namesake.
“There isn’t one right way to approach succession, and just beginning the process of succession and succession planning can sometimes be the hardest part,” says Kemper Brown Jr. “The road to the next generation (my generation) will undoubtedly have challenges, but throughout the process, however that evolves, my hope is that the process allows our team to continue pushing the business forward.”
The processes may vary, but the components that bind these families and businesses together are similar. A good foundation, open communication, and a passion for success is found across the board when taking a closer look at businesses like Daniels Graphics (2nd generation with daughter slated to one day take over), Brunk Auctions (father and son run), and Tops for Shoes (3rd generation), just a few local families enjoying the fruits of their labor from one generation to the next.
Each company has a story, and surely each one has had its obstacles to overcome, but the topic of family business succession is not one to be taken lightly or overlooked. Taking over the family business may be natural to some and an excruciating process to others. Knowing that there are resources within the community can be essential, and seeing successful transitions and stories around you can be enlightening and inspiring in themselves.
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