All in the family

It's a Norman Rockwellian vision: Mom and Dad operating the family business; Junior in the back sweeping after school. Junior grows up, learns the tricks of the trade and joins Dad in the business.

But keeping a family business alive is not always picture- perfect. It has a number of emotional and practical challenges, says Meg Vinton, president of Salt Lake-based Emersus Consulting, which offers family-business consultation.

"There's always potential for conflict, because roles are different, and we tend to carry them over from one relationship to another," said Vinton, who also has worked as a family counselor. "If a family communicates well naturally, it won't be an issue, but in most cases, most of us don't learn how to talk about tough issues, so there's always potential for that conflict."

There are more than 24 million family-owned businesses operating nationwide, according to the New York-based Raymond Family Business Institute, and Utah is home to a number of its own. But if probability wins out, only 30 percent of those businesses will survive to a second generation, and a mere 13 percent will make it to a third, according to statistics from Emersus.

Vinton attributed the weak survival numbers in part to a difficult transition from one generation to the next, poor communication among family members and time demands.

A tough transition

According to the 2002 American Family Business Survey, 39 percent of U.S. family businesses will experience leadership shifts in the next five years.

Key to a successful transition is a clear succession plan, said W. Gibb Dyer, an O. Leslie Stone professor in the Brigham Young University Marriott School of Management who studies characteristics of effective family firms.

"Most founders don't plan for succession, and they never plan to retire, but if you plan for it, you get your estate set up, and you're learning to delegate and teach the next generation," he said. "Successful transition takes place over a number of years with training and mentoring."

There are also a number of emotional issues involved in the transition, and Vinton said properly dealing with these is important. Issues include which child is selected to be the successor and if children are only going into the business because they feel pressured to do so.

"I do think most kids want to please their parents, and if they felt like going into the business would do it, then they would. But I try to help kids do it because of who they are, not because of who someone else wants or expects them to be," she said. "But some parents do put pressure on their kids because they want to leave a legacy, and we have to deal with that."

Bill Thompson of Midvale's Thompson and Sons, a heating, air conditioning and indoor air quality company, is the third-generation manager of the family business. He began working in the store at age 10 and by high school had become the shop foreman. He became the new general manager in 1997.

Thompson said he stayed with the company in part because, "I wanted to carry on the family tradition. I'm the only son. If I didn't carry it on, then it probably would not have gone on as long as it has."

But although he felt a sense of duty, Thompson said his family dealt with the succession issue well and never pressured him.

"There was a time when I felt pressure, but the pressure never came from my dad. He always encouraged me to set my own path. The pressure really came more from within me than from without -- it was more internal. But my dad and grandpa always made it clear that if I chose to stay, they'd be thrilled," Thompson said.

A matter of time

Running a business takes time, and those in charge are rarely able stick to an 8 a.m. to 5 p.m. schedule.

But when running a family business, Dyer said, "it's important to have some boundaries. . . . If we go home and continue to work, then the business dominates our family life, and that's not very helpful, so use time management to create boundaries and get away from the family business."

Thompson agreed. "Sometimes when we get together as a family, business dominates the discussion, which sometimes alienates other family members. That's something you have to be careful about, that you don't let business totally take over. . . . Work shouldn't be your life. It's a big part of it, but it shouldn't dominate."

Excessive time spent with the business and away from home can introduce myriad problems into family life, Vinton said. "People feel neglected; the owner is consumed; they don't have enough time with their family or spouse."

Peter Prier of Salt Lake's Peter Prier and Sons Violins said, "The time I spent is of much worth to my kids, because they have found out anything that is worthwhile, you have to spend time."

Prier and his wife have six children, all of whom have worked in the family store at one time. Paul Stewart Prier has been making bows in his father's shop since 1994. And although Peter Prier said the business has been good for his family, it has come with a price.

"Of course it has been hard. To run a business and to have it going well all takes time," he said. "For family home evening I was always available, and whenever there were concerts, I was always there. However, I also traveled a lot, so my wife has suffered."

Beating the odds

Thirty-four percent of S&P 500 firms are family businesses, according to the American Family Business Survey, and family businesses represent 64 percent of the U.S. gross domestic product. But the number of these businesses that survive past the first generation remains small.

So what kind of families beat the odds?

"They're typically families that have been able to reconcile the sometimes different demands of the business and the family, so they're able to make business goals compatible with the goals of the family, and they're able to work through the conflicts involved," Dyer said.

These conflicts include such issues as whom the company should allow to work, how they will evaluate performance of family members, how much they will pay and how they will plan their succession.

"The basic issue is, do I treat family as business associates or as family members? In some, they get so caught up in the business that they can't be family. In others, they allow the children to do basically whatever they want, because they just see the business as an extension of the family pocket book."

According to Vinton, the key to survival is a whole lot of communication.

"People who own businesses are very focused, bright, driven individuals, but they don't always tend to have good communication skills. The best way to avoid conflict is to address potential issues that could come up early, study problems in family-owned businesses and just communicate," she said.

Despite all the challenges involved, Prier said he is happy to be in a family business. "I love it. It's wonderful. There's no question about it -- this is the way to do it."

E-mail: achristensen@desnews.com

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