Business Continuity is the Prize of Succession (Part I)

Baylor
Legacies Newsletter
by Ernesto J. Poza

Three brothers run a retail chain catering to a well-defined market niche. The business is people intensive, and customer service is very important. Competition is fierce in their industry. As a rule, profit margins are low. New products and product/service combinations do offer opportunities for healthier profit margins. The brothers have grown the business four-fold in their twenty years of leadership and are now preparing for the transition to a third generation of owner-managers.

The next generation is better educated and has worked outside the family business in well-regarded Fortune 500 companies. Motivation to professionalize the firm, update its managerial practices and ramp-up the growth curve is high. The third generation is ready to use organizational and human resource systems to support increased teamwork, delegation with accountability as well as a more strategic approach to the business’ market niche.

The family is now larger. Each of the brothers has three children, expanding the potential pool of successors to nine. To prune the owning family tree, the brothers entered into a buy-sell agreement funded by life insurance. It specifically states that next generation family members need to be full-time employee/managers to qualify for ownership. This is, briefly, the business and family context in which succession is presently taking place in many family-owned businesses. More…

A Family Of Entrepreneurs

by Tom Kurtz

Growing up in a family business was surely a unique experience. I am certain that the simple observation of watching my parents and older siblings respond to the challenges of the business with dedication and perseverance helped to shape my values and work ethic.

As our family topsoil business was growing, I clearly remember my mom, Dolores, our first sales and marketing person (although she didn’t know it at the time, she thought it was about survival), stirring something on the stove while she was explaining to an individual that six cubic yards of topsoil would spread 1,000 square feet, two inches thick.

During the soil season (the end of March through November), my dad, Mel, was always gone before I got up and would come home late at night covered with dirt and dust. My folks didn’t have much time to watch me play little league baseball and things such as that, but I didn’t know any kid, outside of my family, who learned how to drive a truck at age eight. By the fifth grade, I was helping my dad after school and summers working at the topsoil field. It was at this point that I knew I was hooked, and that the family business was right for me. More…