Family Business
For years, fictionalized family-owned businesses have captivated audiences. Remember the power-struggling Ewings of the hit show “Dallas”? It made for quite the quintessential high-drama soap opera.
More often than not, however, real-life family businesses are the opposite. Instead of being rooted in deep, divided conflict, they are mainstays of tradition and success.
Take Johnson’s Diner, for example. The iconic soul food eatery, in Orlando’s Parramore neighborhood, is alive with chatter on a Wednesday afternoon. The sweet Southern aromas wafting out of the kitchen meet soft clinging of silverware. It’s the kind of place you want to come back to over and over again, especially because the menu — packed with made-from-scratch delicacies like macaroni and cheese, meatloaf and corn pudding — changes daily.
With notable customers like Florida Gov. Charlie Crist and huge support from the community, it’s no surprise that 75 percent of its business comes from repeat customers, with 30 percent of those people dining there almost daily.
The secret is simple.
Beyond great food, it’s family.
“We treat everyone like family,” says Clarence Taylor, 36, vice president of operations.
It’s those strong relationships with customers, employees and suppliers that give the diner an edge over the competition. Not to mention, half the staff is family. There’s Paula Taylor, 45, who handles the finances and serves as president, along with Jackie Mims, 46, co-owner; Adrena Daniels, 41, secretary/operations manager; and Chris Taylor, 34, vice president.
Employing Your Nearest and Dearest
Clarence Taylor was anxious to be involved from an early age. “At 9 years old, I told my grandmother that I wanted to work at the diner,” he recalls. “At that point, she told me she had pots bigger than me. The desire has always been there to be a part of the family business, but it wasn’t my time.”
At Johnson's Diner the third generation is leading while the fourth generation is in training. Photo: NuVisions in Photography
That didn’t discourage him. Fast forward 27 years and he is now there seven days a week and has worn every hat — from secretary to general manager to vice president and president. Although he clearly loves keeping the business going, he says there are certainly challenges of working with your closest kin.
“At times it can be very stressful from the standpoint that we are sharing the responsibility together,” he says. “Each one of us has our own idea of what needs to be done, so there are times when we clash. At the end of the day, though, we recognize that we are stronger collectively than individually.”
Successful Succession
The greatest challenge, he says, can be generational leadership. “The key is continuity. Everyone who is here [at Johnson’s Diner] now was here during the previous regime,” he explains. “When my grandmother left the business to my mother, she had worked in the diner already. She was continuing what my grandmother did.”
On the same note, it’s important to keep an eye not only on the present, but also on the future. And when it comes to members of the next generation, the earlier they are prepped to take over, the better.
As baby boomer business owners near retirement, succession planning has become a hot topic. In fact, we are entering a period where the cumulative effect of future “succession events” will be the largest intergenerational transfer of wealth in U.S. history. About $10.4 trillion of net worth will be transferred by the year 2040.
The best way to avoid problems is to create a family business charter that includes a succession plan. This document should include variables like salaries, job descriptions, family participation in decision making, hiring and firing policies, and buy-out/buy-back arrangements, including valuation methodology.
The purpose is to set values and ethical practices the family is comfortable with and also to create and share personal vision statements. Plus, it allows the family culture to mesh with the business and creates a strong platform for management.
Go or No-Go
“Family businesses tend to fail during the third generation, so we’re at that point now, where we’ll either succeed or fail,” says Taylor. “I think we are going to succeed because we are a team with new ideas and great things coming down the line.”
Among the family businesses that survive are some of the largest and best run in the world. And they’ve long been a part of American lingo. We frequent Hilton Hotels, buy Gucci purses and sport Adidas. Locally, Schenck Co., A Duda & Sons Inc. and Sonny’s Franchise Co. top the list.
Family businesses merit special attention, not only because they employ half the world’s workforce and contribute half the world’s GNP, but also because they are especially complex, definitely more so than a “regular” enterprise, owned by public shareholders. The reason: Family firms have an extra dimension of “real relationships” among parents and in-laws, husbands and wives, brothers and sisters. So those running the business are bound by more that just a desire to make money.
Water into Wine
This mind-set is extra important in times of economic turbulence. While we have seen the way some corporations look for quick fixes to address immediate priorities, this is not typically the case for family businesses. “They tend to be longer-term thinking, more values driven and willing to make short-term sacrifices to create the future,” says Mario Fidanzi, director of Stetson University’s Family Enterprise Center.
To Charles Cox and his father Gary, grapes mean big business.
This is definitely the case at Lakeridge Winery and Vineyards in Clermont, according to Charles Cox, 37, who serves as vice president of the winery. As he walks through the gourmet gift shop, Cox explains how the business got its start in Northwest Florida. “One day,” he says, “my dad came and woke us up and said, ‘We’re growing a vineyard.’”
It was as simple as that. Since that backyard experiment, Charles, along with father, Gary, 65, and mother, Carol Cox, 63, have launched two wineries and two vineyards. They’ve each worked through long hours, many canceled vacations and financial troubles.
“I don’t know if this economy is any better or worse than when we started the business 19 years ago,” Carol says.
“We had just started off when the savings and loan crisis hit,” Gary chimes in. “Banks and savings and loans didn’t want to have real estate for collateral. So you had to come up with other ways of financing your operations when the banks won’t give it to you any more.”
Gary, who has a background as a CPA, handles the financials, and Carol is the secretary. Charles manages the day-to-day operations of the company’s wineries in Clermont and St. Augustine.
Outside the Family
The Coxes agreed that a key factor to success is finding a stellar support system. “Having outside counsel is important,” says Charles.
Notably, according to the Small Business Administration, most small businesses don’t have a board of directors, but should. While many family businesses run things in a private manner, there are huge benefits to bringing outsiders into the inner circle. They bring a wealth of knowledge, experience and a different take on things. They can provide checks and balances and may even help mediate family arguments.
Each year the Lakeridge Winery invites guests to make their own wine.
Another tip: Get your children involved in the business, as the senior Coxes did. From an early age, children will develop either a positive or negative impression of the family business. If parents bring home negative aspects of the business, the children end up resenting it. On the other hand, if parents are secretive about the business, children may feel they are not welcome. They may want to be a part of the business, but no one told them they could be.
Talk with them about it often rather than assuming that they know you want them to enter the business, suggest other experts. It’s important to be realistic, but stress the positive aspects.
Equally important, experts contend, is to encourage your kids to explore, travel and work outside the business. It’s not recommended for young people to go directly from school to the family business. They need to develop both a sense of their own powers and skills they can’t learn in the family business.
Vive la Family!
At the end of the day, families businesses often outperform nonfamily businesses for a number of reasons, says Fidanzi. They invest in training and retention of leaders, they can move more quickly than corporate bureaucracies and they invest in employee loyalty to increase productivity and reduce turnover, he says.
Think of it this way, if small business is the engine of the U.S. economy, then family businesses are the deftly tuned, super-performing kind — quietly humming along and delicately handling each bump in the road.
