clock menu more-arrow no yes

Filed under:


"How can I get my children involved in our family's business?"

"How can I be sure I'm being fair to the other employees?""What do you do about a family member who isn't producing?"

"Why do so many family businesses fail in the second generation?"

The family business. It brings its owners more pride and more pain than any other enterprise.

When family business owners get together, as they did at the "Women in Business" conference in Salt Lake City, they question each other with a certain intensity. They are not only talking about money. They are talking about blood.

"How can we all get together for a nice Sunday dinner when I have just had to fire my nephew?"

Some questions have no answers.

The Salt Lake Area Chamber of Commerce, sponsor of the conference, brought in two managers to answer those questions that could be answered. Paul Young, manager of the Salt Lake Division of Young Electric Sign Co., is an in-law. His grandfather, Thomas, started the company in 1920 in Ogden, and his father, Thomas Jr., helped it grow to its present size: 850 employees.

Dan Lofgren is an "out-law." He is president of Prowswood Management Inc. but not related to either of Prowswood's founders, Robert Wood or Richard Prows.

Paul Young is a family member. The other family business owners understood his pride when he spoke of his grandfather's enterprising spirit. "He borrowed $200 from his father and began doing gold lettering on windows. . . . After World War II he sold the first big electric sign in Las Vegas."

When asked how to get children interested in the business, Young said, "Be low-key. When I was young I thought of many other things I wanted to do. My dad started me at work sweeping floors when I was 16. I came to love the business."

As for getting along with each other, Young could only say, "For us the continuation of the company is the highest value."

Last year when Thomas Young Jr. retired, he made his elder son, Michael, president. Michael offered to switch jobs and let brother Paul be president. Paul Young decided the business was better off with his brother at the helm.

"Isn't it frustrating to work in a family-owned business, don't you feel like you can't advance because you aren't a son," other business owners asked Lofgren.

"For me the advantages of working in a family business outweigh the drawbacks," he said. "You have to understand that we all have the same motives. The owners want to provide for their families, just like I do.

"In starting a business, they took a big risk. They earned the right to have their children in the business. One has to accept that premise to be happy working there.

"The advantage of working in a family business is that I am working for entrepreneurs. My bosses are used to making good decisions quickly. They aren't afraid of risks."

Lofgren figures he's much more likely to see his ideas become actions in a family business than in a large corporation - where a board of directors might deliberate for weeks over one proposal. He finds family business exciting.

Finally, the business owners asked about transitions. Those women who had inherited a business from their fathers were still helping the company through the transition. (One woman added that she thinks most fathers prefer to have a son to leave the business to.) Those who were thinking about the next generation wondered how to be fair and avoid hurting feelings.

"My grandfather gave my father the controlling stock," explained Paul Young. Before choosing one child for that honor, Young advised thinking about the possible problems that could cause among brothers and sisters.

Tips for non-family workers

-Never attack or criticize an incompetent family member. Their parents have no choice but to defend them.

-Blame the system, not the person. Say, "Mr. Jones, I see that Steve is overloaded lately, can we reassign some of his responsibilities?"

-Recognize that every company has strengths and weaknesses.

It's too easy to blame problems on the fact that this is a family business, rather than look for solutions.

Tips fpr family members

-Make the next generations' positions in the company unrelated to the amount of stock they own. Children can share equally as stockholders, while each performs a job that suits his skills.

-Make them earn their position but don't be harder than you are on other employees. Your child will resent you and other employees will perceive that you are giving your offspring extra attention.

-Ask for your manager's help. Say, "Janet's 18 now and I want her in the business. Where should we start her?"