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The Legacy-family Businesses Struggle With

The Legacy-family Businesses Struggle With

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Published by Keith Voges

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Published by: Keith Voges on Aug 22, 2010
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he Turners of Manasquan, NJ, consider it aprivilege to operate their family-owned bakerybusiness. “This business is more than doughnuts;it’s us,” says Jim Turner. “We all share in theawards that my father has won over the years.”The Schundlers of Edison, NJ, have had the familybusiness in their blood for generations. Theirgrandfather, H.C. Schundler, founded theirconstruction material business and their great uncle,F.E. Schundler, founded an aspect of the entireindustry. F.E. then set up his nephew, OttoSchundler, inthe business in1951.“The realchallenge of mygeneration isnot just to keepthe SchundlerCo. current intechnology andmarkets, butmost important,to develop atradition of passing the company from one managerto the next in a timely manner.”The legacy. For some family businesses, it isthe primary motivation for keeping a companyalive. F.E. Schundler, Jeff’s great uncle, may nothave intended to create one when he began thebusiness over 70 years ago, but that is whatdeveloped over the years.In fact, Schundler’s story was probably just likeany other entrepreneur’s. He had one good idea, orcould not find a job, or get along with his boss, orwas stubbornly independent and started thecompany from scratch. There was not any profit foryears, let alone any legacy to protect. The burdenwould be borne by future generations.Says Jeff Schundler, the company’s CEO: “Weeach feel an obligation to improve the business. Itdoesn’t matter what our titles are. If your name isSchundler, you give just a little bit more.”Put yourself in the position of being the heir of your grandparents’ business. If you do not want todo that type of work, the legacy is at risk. Couldyou handle the guilt? If you could, would yourrelatives let you?Some families know the scenario all too well.When the time came to plan for succession, none of their children wanted to run the business, so theyspent the next several years looking for buyers andworking with the estate planning experts to limittheir tax obligations as they transferred assets totheir children and the company to others.“I’d be lying to myself if I said that I’m notdisappointed,” says one owner, who grew thecompany from $150,000 in revenues in 1950 to $4million in 1980. “We took care of our familyfinancially, but when the company passed tosomeone else, it was as though part of us died.”To many, having a family-owned business waslike having another child. It did not feel right tostop nurturing it.“I feel very gratified knowing that my son,Doug, wants to continue my business,” says StevenGyure, president of S4J, Inc., a New Brunswick-based manufacturer of specialty lures for themedical industry. “Years ago, I wasn’t sure any of my three children would want to take over thebusiness, but as Doug became an adult, it becameobvious that he would make an excellent presidentsome day. It’s like having a piece of yourself liveon well after you are gone. It’s been fun to see apreview of what the future will be like.”To many entrepreneurs, having a familybusiness goes beyond how many relatives areinvolved in the company. Art Crowley, Sr.,president of Garon Products Inc., thinks of GaronProducts as a family business because of “how weall depend on each other on a daily basis.” One visitto Garon Products’ Wall headquarters and youknow what Art means. Except for some physicalclues, like similarly shaped noses, you might notknow that Art Jr. and Mike are the only otherCrowleys in the business.Do not tell Vinnie Azzenza, Bob Hornak, andChris Grant they are not relatives. They will notbelieve you. Even if suddenly no Crowleys came towork, these managers would press on. The Garonway transcends Crowley.Because of such very personal feelings thatbecome associated with family-owned businesses,offspring sense their parents’ desire to have thebusiness live on, even when their parents have nothad an opportunity to make their desires known.
T
THE LEGACY: FAMILY BUSINESSES STRUGGLE WITHSUCCESSION
 
By Aldonna R. Ambler, CMC, CSP, The Growth Strategist™
To many, having a family-owned  business was like having another child. It did not feel right to stop nurturing it.
 
©
2006 AMBLER Growth Strategy Consultants, Inc.2
Many try very hard to keep the business in thefamily, even when they had something else in mindfor themselves.Take Ozone Pure Water for example. When theowner, Marty Langweiler, died in his early 50’s,none of his children were available to run thebusiness. Frankly, no one was expecting him todevelop diabetes with major complications. Tokeep the business in the family, his daughter,Michal, left her teaching position in northern NewJersey and relocated to Ozone’s Atlantic Countybase. She built the business by selling theirproducts in the highly competitive casino industryand by expanding the product line into varieties of bottled water and coffee service. She did not seerunning Ozone in her long-term plans. WhenOzone hit $1.2 million in gross revenues in 1986,she sold her shares to private investors fromPhiladelphia. Although Michal still holds aminority share of the company — now KeystonePure Water — most of her time is spent in the realestate business and raising two very active boys.Does Michal regret letting the family business go?John Henry, one of Keystone’s major shareholders,says, “Michal did what she had to do.”She knows that her father would be proud of what she was able to do with the business prior toselling it. The worst thing she could have done is to just let the business die. She felt her father deservedbetter than that.On the other hand, some people view having afamily-owned business as expanding the optionsfor their children, but do not want their children tofeel like the business is another obligation trappingthem. Take Marpac Industries. Over the past 24years, Don and Sue Sykes have built the Waldwick-based Marpac into a high quality, specialtycontainer manufacturing business, employing 70people. Their customers include several originalequipment manufacturers, and they hold numerouspatents. Although their 28-year-old daughter is notcurrently employed by the company, their son is anemployee. At this point, it is not clear when or if either of the Sykes children will want to assume ameaningful position with the company.So for now, Don and Sue keep their optionsopen. “If our children want the business, it’s herefor them. If not, we have created something veryspecial at Marpac,” says Suzanne Sykes, Marpac’schief executive officer. But knowing the Sykes’children, they would probably make sure thatMarpac continued if something were to suddenlyhappen to their parents.The Sykes know that keeping their optionsopen is easier said than done. Every few years theyinterview their children to learn about theirpreferences, not make assumptions, and renew theiroffer of an opportunity share in the business. “Butwe don’t risk the future of the business waiting andhoping that one of our children will want a keyrole. We have to keep going. At some point, wewill have to make commitment to non-familymembers, because we feel that we owe somethingto people who have been with us and helped makeMarpac what it is today,” says Don Sykes.When the Dalys of Suburban Services inHolmdale wanted to retire, they reviewed theirbooks. It soon became apparent that they and theirchildren could make more money if they sold thecompany rather than expect their children tooperate such a tight-margin business during arecession. Like the Sykes, they had kept theiroptions open. Their heirs will benefit from theirhard work without the obligation of running thecompany.
Family Business
magazine defines a family-owned business as having at least 25 percent of theownership within a given family and having at leasttwo family members involved in running thecompany. Of course, this means that long-timefamily-owned companies like Campbell’s Soup Co.are no longer family-owned businesses. The threeheirs of the condensed-soup inventor, John T.Dorrance, Jr., control 32 percent of Campbell’sstock, and another 27 percent is spread among sixother family groups, but no one in the Dorrancefamily actually works at the company. Those of uswith businesses in Camden County know that mostpeople have not quite let go of the image of Campbell’s as a family-owned business, despite
Family Business
’ official definition.Recognizing that others have a variety of definitions for a family business may help youprepare for the succession planning.If you value tradition or are having troubleletting go, one important part of your familybusiness may be leaving your mark. If so, youmight want to consider filing for trademarks andpatents, licensing or franchising, writing a book,doing public speeches, or being nominated forprestigious awards — like the Malcolm BaldridgeQuality Award — to help you meet those needs.You never know what your offspring will want or

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