A family-owned business never truly closes. Long after the doors have been locked and the inventory taken, its members must navigate not only the challenges of keeping an enterprise afloat, but also maintaining a work-family balance, all while keeping one eye on the future of their company.
It’s a balancing act that’s currently taking place in a majority of American businesses today. According to the U.S. Bureau of the Census, 90 percent of businesses in the country are family-owned or controlled, including 35 percent of Fortune 500 companies, says Family Enterprise USA.
In Arizona, 38.9 percent of the 58,455 companies that responded to the Census’ 2016 Annual Survey of Entrepreneurs were family owned; 38 percent in greater Phoenix alone, according to the Greater Phoenix Economic Council.
The rewards of a family-owned business almost go without saying: potentially greater job security, an intimate understanding of the firm’s decision makers, and the opportunity to ultimately leave one’s children a business legacy. But the arrangement also carries its own unique challenges.
Family-Owned Businesses Have Eyes on Past and Future
Mixing personal and business can make relationships that much more complicated. From husband and wife to mom and son, learn what it takes to run a family business.
What’s best for the business
This summer, Olsen’s Grain Inc. will celebrate 40 years of supplying pet and livestock feed to several Arizona communities, all under the watchful eye of the Olsen family. During that time, they’ve tackled everything from expansion to capitalizing on trends (hello, “backyard chickens”), all while making decisions as a family.
“It’s really about consensus building,” explains owner Mike Olsen. Along with his wife Sherrill, and through the financial backing of parents John and Ann, the Olsens bought Chino Valley Grain Co. from Ken and Lavon Cooper in 1979. (The company dated back to at least the 1940s, Mike recalls.)
In 1980, they were joined by Mike’s sister Kathy and her husband Steve Sischka, who has handled all the marketing. Mike’s brother Dan and his wife Barb came on board in 1983 to manage the Dewey location, and ultimately supervised the construction of the Flagstaff and Clarkdale stores.
Today, those best interests are guarded by a management team that includes Mike’s son Kyle (feed mill and customer service manager at the Chino Valley location), and Dan’s stepdaughter Kristi Hubbard (Flagstaff store manager). Meanwhile, Mike and Sherrill, his siblings and brother-in-law all serve as a board of directors in an advisory role.
With roughly 80 employees; locations in Prescott, Flagstaff, Dewey, Chino Valley and Verde Valley; and with both sales and customer counts continuing to rise, there is a lot at stake. Which makes it all the more important that “everything is on the table and talked about, and that there are no issues that could create conflicts. That’s been difficult at times,” says Mike. “In the end we’ve always been able to work it out and come to an agreement.”
Business-family balance
Clear communication is vital to a family business, agrees Stacy Pratt Fisher, founder of female-entrepreneur coaching practice The W Collective in Scottsdale. But so is maintaining clear boundaries between work and family life.
“As entrepreneurs it can be challenging to not let work bleed into your home life, family dinner time, and every date night. The same for not letting too much personal life show up in the business,” she says.
Be clear about the capacity in which you’re coming to a conversation, she advises—are you speaking as a CEO or as a parent, for example. “Setting the intention and showing up in the role in which you need to have this conversation is the Number 1 issue. A close second is knowing your role.”
Pecking order
“Typically, the biggest challenge to running a family-owned business is deciding who has final say on major decisions,” contends George Gebran, who co-owns U.S. Egg—a local restaurant chain specializing in breakfast and lunch—with brothers Mike, Mario, and Gebran.
“In our case, it’s simple: It’s age/experience oriented, so Gebran has final say on all major decisions. This has led to our success because we know who’s in charge, and we don’t challenge the authority. If we’re split and aren’t sure what to do, then we run it up the flagpole and have my father decide.”
The patriarch, Oscar, now 75, was already a successful restaurateur in Cedar Rapids, Iowa, when he moved the Gebran clan to Arizona in 1991 to keep them all together after his two eldest sons enrolled at Arizona State University. Once in Arizona, Oscar snapped up U.S. Egg in Tempe, originally founded in 1986. Over the next 10 years, he ran that location with his four sons and daughter Vera before opening their second location near Old Town Scottsdale in 2000. Today, U.S. Egg boasts six locations and 230 employees.
This success is thanks, in part, to knowing their roles. George oversees marketing and advertising, Gebran takes care of operations and expansion, Mike accounting and human resources, and Mario handles everything related to the kitchen and food, from menu planning and recipe development to testing and cooking.
You don’t always get full cooperation in families, points out John Lewis, NB|AZ Senior VP Business Banking Regional Manager. “I’ve experienced some cases where the business owner has family members involved, but they don’t have the capacity to step up and become owners. Sometimes you see businesses form a board to reduce emotions from impacting decisions and to keep things civil between the siblings.”
Keeping it in the family
Working for a company that your family owns usually means ensuring that the business remains in the family for the foreseeable future.
At U.S. Egg, there are 13 Gebran children between the ages of 5 and 16 being groomed to go into the family business, says George. “We wouldn’t sell to anyone outside the family; this is a legacy brand.”
Indeed, succession planning is one of the biggest concerns a family business must contend with, says Lewis. “They should meet often and early with their trusted attorney and CPA to ensure that all of that transition happens as seamlessly as possible. We’ve been involved with businesses that didn’t have good advice or planning, and the kids are left trying to sort through problems when the founder passes away unexpectedly.”
Case in point, Lewis recalls a company that had a large number of children. “There was no way it was going to support all of the families; it was just not feasible,” he explains. “They had to go through this process of asking who’s going to take it over and at the end of the day, I think two ended up being the owners, and one additional family member stayed on in a key management position. Usually you’re only going to have two to three family members.”
Still, the survival of a family-owned company doesn’t always mean it has to be run by the family who started it. The Olsens are faced with a constant reminder of this every time they use their feed mill at the Chino Valley location—the same mill employed by the Cooper family during the Chino Valley Grain days.
“We’ve always believed that success of this business is much better for our family—to continue what we did and improve what we do—than to sell it. The next generation may decide to sell,” Mike admits, “but we certainly don’t want to.”