When Family Meets Business

When Family Meets Business

It was hard enough to make Junior keep his room tidy. Now that he’s in the family business, you may be having a hard time turning the company keys over to his control. Or perhaps you have your heart set on law school, but you’ll help Mom with the retail business for a year or two or 10 or more, finally putting aside your dream completely. Starting and running a business can be difficult, but adding “family” to the scenario gives it a tricky dimension. Donald Trump may say “it’s nothing personal, it’s business,” but when family is involved, it’s hard to separate the two.

Family businesses dominate the U.S. economy, with an estimated 75-90 percent of registered businesses fitting into this category. They come in all sizes, from the local mechanic to Fortune 500 companies like Ford Motor Company. According to James Hutcheson, president and founder of ReGeneration Partners, a family business consulting firm based in Dallas, only one third of all family enterprises make it to the second generation of family leadership, and the number drops to 10 percent for the third generation. There are both conscious reasons (e.g. no heirs) and unconscious reasons (e.g. business failure) for business dissolution, and family matters certainly do come into play.

Family Business Challenges

To understand the roots of inter-relational family business issues, one must understand some of the biggest challenges that family businesses face. The first concerns loyalty and position within the company. Because family businesses are all about survival in the beginning, Pop might install Junior as director of operations when Junior has no real operations training or experience but will work for the right price. When the company begins to flourish after several years, “we find ourselves with family members employed in key positions that they would not be in at all on the open market,” says Hutcheson. Also, he says, you often have family members drafted into the business who don’t necessarily have a real passion for it or have never tried another career path.

If the children really do desire to be in the family business and have an interest in the field, Hutcheson advises they gain relevant experience elsewhere for a significant time period. “The boss-employee relationship is very important in the early stages of a person’s career because it gives them a grounding in how things are really done,” Hutcheson says. “Once they join the family business, it’s unlikely they will get the kind of feedback that will allow them to develop fully their own identity and competencies.”

Another major challenge is to set up a shareholder agreement. This document outlines how major decisions will be made concerning ownership, selling shares, buying in and passing the business to the next generation. Having a legal document now will help squelch potential family conflict when these prickly procedures arise in the future.

Another challenge is establishing an appropriate system of governance for the family business, typically as a board of advisors or directors. “If you can only do one thing in your family business to increase the likelihood of long-term sustainable success, it’s to install appropriate governance,” Hutcheson says.

“When you have people who are beholden to you, it’s likely the owner will get censored and filtered feedback, and that goes for professionals like lawyers and accountants, as well. You really want to have independent, objective people in director or advisor roles who meet on a regular basis.”

Family Before Business

Peter Mezitt, General Manager for Weston Nurseries in Hopkinton, Mass., was candid about the recent troubles at his family’s business. Differences in expectations forced the family involved in day-to-day operations to file for bankruptcy protection to pay off another family member. A large land sale is expected to lift the business from Chapter 11 by the end of the year. Thankfully, Weston has had the full understanding and support of its employees, vendors and the local community, which certainly has helped the family through tough times. 

“This should never have happened, and no one expected it to,” Mezitt says. “But you never know what the future will bring in terms of siblings.” He sees the source of the problem stemming from the second generation’s decision to make things equal for both sons. The mistake was using the business as the means to do this, although one brother was more qualified and committed to the business. Once the company is out of bankruptcy, the family plans to set up an agreement to make sure this cannot happen in the future.

With family relations strained due to the situation, Mezitt reflects that open-mindedness and good communication is essential in family businesses. “Take care of the family first and then the business,” Mezitt says. “If you take care of the business first and ignore the family, the family could undermine the business.” 

Smooth Sailing At Atlantic

Sig Feile and Christina Feile are the father/daughter team that head up Atlantic Nursery & Garden Shop in Freeport, New York. For them, transitioning the business has been a smooth process thus far.

“We were hoping that our children would be interested in the business,” Sig says. “We didn’t push them in any way, shape or form. Christina had to make up her own mind whether she wanted to join or not.” Christina joined the business in April 2001 after a successful career as a currency trader. Looking for a change, father and daughter discussed the options. “If it worked out, that would be great,” Christina says, “and if it didn’t, I wouldn’t be too old or far out of the financial industry to go back.”

Another daughter, currently a teacher, helps the family during busy spring weekends, and may return to the business in the future when that opportunity fits both her and the business’s needs.

It has worked out for Christina, and the two have already checked off a number of Hutcheson’s “must dos” for a successful transition. In addition to logging several years in a boss/employee situation in the financial industry, Christina took on an apprenticeship in a similarly sized garden center for seven months. She’s also working toward a certificate in horticulture. And her Masters in Business Administration degree doesn’t hurt, either. Sig and Christina are also working with an estate planner and financial advisor to transfer stock of their company from one generation to the next.

Sig plans on staying involved in the business for at least the next 20 years, but with a declining management role. “There are plenty of things he enjoys doing that I am not comfortable taking on right now until I absolutely have to, and I would enjoy having his expertise around,” Christina says. “In our case, I don’t foresee the window closing on my father and that doesn’t bother me. If it does become a problem, we’re going to work through it. It’s an old window so the draft comes through a lot.”

This isn’t to say they don’t have their differences in opinions. “I have come to learn – and I am still learning – that my way is not the only way,” Sig says. Christina says they make an effort to discuss differences first and try to show a united front with their staff. “We discuss and remedy anything afterwards, if it needs to be,” she says.

Christina feels strongly that coming back to the family business is not something children are entitled to, especially if they don’t have the appropriate training or skill set. “It’s survival of the fittest; if they aren’t fit enough to run the business then why should they run the business and prolong the inevitable?” she says. “That’s not fair to the employees or the other owners of the business.” She also had the insight to recognize even if the son or daughter has the skills, he or she might not have the interest in the business, and that could be just as disastrous.

Leave a Reply

More From Finances/Operations...
Do It Big Book

July 6, 2015

Benary’s “Do It Big” Book On Big Begonias Is Available For Retailers

The "Do It Big" guidebook provides tips on combo plantings, containers and even recipes for food and relaxation. Retailers can use the book to give their customers unique ideas.

Read More
GCA Portland Tour

July 6, 2015

Next Year’s Garden Centers Of America Summer Tour Will Take Place In Portland

On the heels of last month’s tour of Milwaukee, Wis.-area retailers, GCA has announced that next year’s summer tour will take place in Portland, Ore., known as a hub of garden retail innovation.

Read More

July 2, 2015

At Great Risk, Ernest Wertheim Helps Others To Escape Nazi Germany [Book Excerpt]

Editor’s note: Ernest Wertheim met the famous Pastor Niemöller at his cousin’s wedding. Niemöller is credited with saying: “First they came for the communists, and I did not speak out – because I was not a communist. Then they came for the socialist, and I did not speak out – because I was not a socialist. Then they came for the trade unionists, and I did not speak out – because I was not a trade unionist. Then they came for the Jews, and I did not speak out – because I was not a Jew. Then they came for me – and there was no one left to speak out for me.” Niemöller told Wertheim about a ski instructor at a mountain resort that was half in Germany and half in Czechoslovakia. Here is an excerpt from Wertheim’s memoir, Chasing Spring, that recounts why Wertheim, renowned for his love of […]

Read More
Latest Stories
Do It Big Book

July 6, 2015

Benary’s “Do It Big” Book On Big Bego…

The "Do It Big" guidebook provides tips on combo plantings, containers and even recipes for food and relaxation. Retailers can use the book to give their customers unique ideas.

Read More
GCA Portland Tour

July 6, 2015

Next Year’s Garden Centers Of America Summer Tour Will …

On the heels of last month’s tour of Milwaukee, Wis.-area retailers, GCA has announced that next year’s summer tour will take place in Portland, Ore., known as a hub of garden retail innovation.

Read More

July 2, 2015

At Great Risk, Ernest Wertheim Helps Others To Escape N…

Editor’s note: Ernest Wertheim met the famous Pastor Niemöller at his cousin’s wedding. Niemöller is credited with saying: “First they came for the communists, and I did not speak out – because I was not a communist. Then they came for the socialist, and I did not speak out – because I was not a socialist. Then they came for the trade unionists, and I did not speak out – because I was not a trade unionist. Then they came for the Jews, and I did not speak out – because I was not a Jew. Then they came for me – and there was no one left to speak out for me.” Niemöller told Wertheim about a ski instructor at a mountain resort that was half in Germany and half in Czechoslovakia. Here is an excerpt from Wertheim’s memoir, Chasing Spring, that recounts why Wertheim, renowned for his love of […]

Read More
Petunia ‘Pink Halo Ray’ (Danziger)

July 2, 2015

Improve Your Plant Knowledge At 2015 Summer Show Classe…

Make plans to attend some of these educational presentations, seminars and panel discussions covering plant knowledge that will be taking place at this year’s conferences.

Read More

July 1, 2015

Marketing Classes At 2015 Summer Shows

Make plans to attend some of these educational presentations, seminars and panel discussions covering marketing that will be taking place at this year’s conferences.

Read More
Alden Lane Nursery Water Wise

July 1, 2015

Drought/Water Management Classes At 2015 Summer Shows

Make plans to attend some of these educational presentations, seminars and panel discussions covering drought and water management that will be taking place at this year’s conferences.

Read More

June 29, 2015

All-America Selections Releases 2015 Annual Report

The annuals, perennials and edibles that are All-America Selections winners can help every segment of the distribution chain sell more product because of a back story that explains what it takes to become an AAS winner.

Read More
Lloyd Traven

June 29, 2015

Peace Tree Farm’s Lloyd Traven Will Be A Keynote Speake…

Speaking on Wednesday, Aug. 5, Traven will offer a wake-up call for the industry on how to capture and engage young consumers.

Read More
Botanica Collection (Landmark Plastic)

June 29, 2015

New Products Debuting In Summer 2015 [Slideshow]

These new products will be making their debut at this summer’s retail shows. Be sure to stop by and visit their manufacturers while you’re walking the trade show floor.

Read More

June 26, 2015

Share Your Memories Of Pink Flamingos To Honor The Pass…

Tonight I will lift a glass to Donald Featherstone, who created the iconic plastic pink flamingo that became a symbol of kitsch or bad taste, depending on your sense of style. He died this week at age 79 (Click here to read his obituary from NPR). I’ve long had an affection for the tacky lawn art. I lived in Austin, Texas, throughout most of the 1980s and and early 90s. While living there, I often drove by a house that was far away from the epicenter of Keep Austin Weird, in a quiet established community known for interesting architecture, good schools and its well-heeled residents. This house stood out because it had a plastic pink flamingo, out of place in this pocket of good taste. Over a few months, the homeowner added more pink flamingos until it was a sizable flock. Did I mention his house was on a major thoroughfare? […]

Read More
Feature image

June 25, 2015

Ernest Wertheim Rescues His Father From An Early Concen…

After Wertheim's father was arrested when re-entered Germany after a lengthy absence in 1937, his family heard there may be a way to free him. Here is an excerpt from Wertheim's book, Chasing Spring, recounting what happened next.

Read More

June 25, 2015

Human Resources Classes At 2015 Summer Shows

Make plans to attend some of these educational presentations, seminars and panel discussions covering human resources that will be taking place at this year’s conferences

Read More
Chasing Spring and Its Not Just about the Hat

June 22, 2015

New Memoirs From Ernest Wertheim And Allan Armitage Off…

New books from garden center design expert Ernest Wertheim and plant expert Allan Armitage offer a glimpse into the two mens’ careers. More importantly, however, they also go into detail on each man’s life experiences that helped make them what they are today.

Read More
Hawthorne Gardening feature image

June 22, 2015

Scotts-MiracleGro’s Subsidiary Buys Hydroponic Co…

Scotts-MiracleGro’s Hawthorne Gardening Co. recently announced it has purchased General Hydroponic and Bio-Organic Solutions. The company is based in Santa Rosa, Calif., and is “popular with marijuana growers,” according to Columbus Business First. Hawthorne Gardening Co. was created in October 2014 and is led by Chris Hagedorn, the son of Scotts-MiracleGro CEO Jim Hagedorn. At the time, Scotts-MiracleGro said the division was created to serve a younger and more urban customer. Purchasing General Hydroponic will position Hawthorne to respond to the U.S. changing attitudes and laws to legal medical and recreational marijuana. Tom Knox’s article about the purchase in Columbus Business First says General Hydroponics supplies liquid fertilizers and has plants in California, West Virginia and France. You can read Scott’s press release on the purchase here.

Read More

June 21, 2015

Ian Baldwin’s Blog Spurs A Debate On What Matters…

Industry consultant Ian Baldwin wrote recently about the need to emphasize nature more in garden retail. He pointed out that most garden retailers would prefer to go backpacking or kayaking before going to a movie, yet that passion for nature rarely translates in their customers’ shopping experience. His comments stirred a vigorous debate about organic vs. local and how butterflies and wildlife marketing are working at the ground level. Read the debate below. If you would like to read the original block, click here. Ian, this an interesting dilemma. We have classes on creating a Backyard Wildlife and they are generally well attended, but I think the vast majority of gardeners consider these kinds of backyards to be too messy and unruly. Obviously this is a misconception and one that our industry could do a better job of clarifying. Keep up the good work, my friend. Steve Smith, Sunnyside Nursery The […]

Read More
Fire Ants

June 19, 2015

Imported Red Fire Ants Discovered At Delaware Garden Ce…

State agriculture officials made the discovery during an inspection of tropical plants imported from Florida. The state has issued an alert to local businesses reminding them to check any shipments they may be receiving.

Read More
Moana stacked pallets display

June 19, 2015

Display And Merchandising Classes At 2015 Summer Shows

Make plans to attend some of these educational presentations, seminars and panel discussions covering displays and merchandising that will be taking place at this year’s conferences.

Read More
Webinar Laptop Graphic

June 17, 2015

Webinar: Proven Ways To Protect Your Data From Hackers …

On June 4, Today’s Garden Center broadcast a webinar addressing ways garden retailers can increase their online security. Listen to the recording of the webinar, where our panel of experts discussed the steps you can take to ensure your business, your data, and your customers are safe.

Read More