Family Businesses Survive the Test of Time

Family businesses that are managed by multiple generations of family members can create continuity in those firms. But keeping the business in the family may be more complicated than it first appears. Overall, fewer than 30% of family businesses survive to the second generation and just 10% hold on through the third.

While many founders of companies hope or plan for one or more of their children or other family members to take over the business, sometimes the children have other ideas. Children often do not have the same enthusiasm as their parents had in starting and growing the family firm.

Casey’s Irish Imports in Rocky River is a family business that just celebrated its 25th anniversary. Co-founding the firm with her husband Tom, Vera Casey had a dream of “bringing the treasures of her native Ireland to America.” Today the business is owned and managed by daughters Maureen Casey-Brubaker and Kathleen Casey-Proctor. The store sells Irish made and themed merchandise.

“Neither of us (Casey-Brubaker or Casey-Proctor) imagined all those years ago that we would end up running the store,” Casey-Proctor remarked. Both had other career plans after working in the family business as teenagers. However, as the store expanded over the years, both became more involved. Running the store has given the sisters some flexibility in raising their families. Eventually “my parents were getting older and decided they wanted to travel more and semi-retire. Mom always wanted someone in the family to take over the store,” according to Casey-Proctor. The sisters bought the business in 2013.

Family businesses need to have succession plans just like any other enterprise. Assuming family members, even those who work in the business, will take it over can be dangerous. Often family businesses lack a business plan and mission that the next generation can use to guide the future of the company.

Ohliger Drug in Fairview Park is in its fourth generation in the family. Tom Ohliger is a pharmacist and owns the business. The original store was started in 1870 in Alliance, Ohio, by Ohliger’s grandparents.

Ohliger worked in the business throughout his childhood, starting at the age of six doing a variety of tasks. “I knew I eventually wanted to go into the family business, but wanted to do some other things first. I got my real estate license, became a pilot, and worked three years at Metro Hospital in the Pharmacy Department. After that, I joined the family business,” he said. His sister Molly Ohliger-Lavelle owns the company’s North Olmsted location.

More Issues to Consider

Deciding which of the children will take over the business is another decision that needs to be made. The other siblings who are in the business then typically work for that brother or sister. Job descriptions for family members need to be established as with any other employees. Sometimes, family businesses do not formalize duties for family members for fear of offending those they love. Not doing so can cause problems in assigning accountability.

According to Inc. Magazine, many family-owned entities make the mistake of mixing business and family funds. “This is especially important if a number of family members might be liable, as would be the case if, say, they signed for loans or chipped in cash or otherwise could be considered partners,” according to Inc. columnist Chas Rampenthal. 

Compensating family members who work in the organization can be a sensitive issue. Each family member needs to be fairly paid relative to the other family members and non-family employees of the company.

Finally, the most complicated issue in running a family business may be communication. The emotions tied up in personal relationships can get in the way of effective communication on the job. A family spat over the weekend should not spill over into the need for an objective discussion about a decision on Monday.

“Communication is not in a board room but rather over a family dinner,” Casey-Proctor stated. “Challenges include trying to plan family events, parties or trips that always have to be arranged around the store and schedules.”

As with all businesses, family firms need to look to the future. “Our store is also unique because we are multigenerational and so are our customers. It is not uncommon for a grandmother, daughter, and granddaughter to come in shopping together. Families have shopped with us for years,” Casey-Proctor stated.

While personal issues can create problems in managing a family business, concentrating on both present and future decisions can make the family firm succeed into the future. Ohliger suggested there might be even bigger changes in the pharmaceutical industry. “We are always looking for new business opportunities. I expect soon we will be selling medical marijuana.”

Perry Haan

Dr. Perry Haan is Professor of Marketing and Entrepreneurship, and former Dean of the Business School at Tiffin University. Haan resides in Rocky River. He can be reached at 419-618-2867 or haanpc@tiffin.edu.

Read More on Opinion
Volume 2, Issue 1, Posted 5:56 PM, 07.03.2014