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Family affairs

Businesses passed down from generation to generation create a personal atmosphere but, sometimes, an uncertain future

Businesses passed down from generation to generation create a personal atmosphere but, sometimes, an uncertain future

November 25, 2002|by Chris Copley

chrisc@herald-mail.com

For little Sam and Julia Wright, their parents' business was like a second home. They spent evenings at Tri-State Printing with their father and mother, Peter and Karen Wright, doing homework, cleaning up, helping out where their parents needed them to do.

"We pretty much grew up in the business," Sam Wright said. "That's where we went after school. My parents needed cheap labor."

Now Sam Wright, 25, is general manager of Tri-State; Julia Wright, 23, is treasurer. They are second generation owners of the firm, which employs 10 and produces printed material for clients in the greater Hagerstown area.

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Their father bought the business in 1986 from a man who started the company in his basement. Sam Wright said operating a business is a family tradition. His father's family has been running businesses for generations. His grandfather owned a Massachusetts ribbon factory started by his great-great-grandfather.

That heritage rubbed off on Wright and his sister.

"I got a lot of my interest from my grandfather," he said. "We really couldn't see ourselves doing anything different."

Eighty to 90 percent of all U.S. companies are family-owned or controlled companies. According to information at the Institute for Family-Owned Business (IFOB) at the University of Southern Maine in Portland, Maine, Web site, www.usm.maine.edu/ifob/index, family businesses are an economic powerhouse in the United States.

Family businesses - in which at least one member of the founder's family is involved in some level of business planning or management - account for 78 percent of new job creation over the past two decades, 60 percent of the nation's employment and 50 percent of gross domestic product.

Even a more conservative definition of "family business" - in which multiple generations of family members are directly involved in day-to-day management of the business - shows 15 percent of American workers are employed at family businesses, producing 12 percent of U.S. GDP and creating 20 percent of new jobs.

Family businesses have no more guarantee of success than other businesses. The IFOB says average lifespan of a family-owned business is 27 years. The challenge of passing the business to the next generation involves finding a successor and developing a successful business plan.

Sam Wright's parents remain active at Tri-State. But he said family members are realistic about future expectations of each other.

"We're not going to hold anybody hostage," he said. "If my sister wants to move to D.C. with her boyfriend, that's OK. If someone doesn't want to be in the family business, you're only hurting yourself by making them stay."

Tom Stocks is the third generation to work in his family's business, Sheetz Florist, in Charles Town, W.Va. He's worked there for 10 years, since he left Peoples Drug Store after a 30-year career.

He's not the first family member to switch careers mid-life.

"My grandfather, Vernon Sheetz, was a lawyer," Stocks said. "In 1924, he decided to stop practicing law and become a florist. He liked to grow things."

So Sheetz and his wife, Katie Belle, built three greenhouses by their house and opened a florist shop. They delivered flowers by wagon in the Charles Town area. Stocks said the greenhouses remain standing. Now the business is owned by the Sheetzes's daughter, Florence Stocks, and her son, Buddy, Tom's brother.

Core values


The business has changed over the years - nowadays, they buy their flowers from wholesale growers and deliver them in vans instead of wagons - but the family's approach to success has remained constant: Keep the flowers fresh and attend to customers' individual needs.

"My grandparents were very customer-oriented and that's not changed," Tom Stocks said. "If we wouldn't buy it ourselves, we wouldn't sell it to someone else. One salesman said my mother threw away more flowers than any other shop he worked for."

He acknowledged that it can be difficult working with family members. Personal relationships can slop over onto business responsibilities. But he likes the way workers at Sheetz - family or not - seek resolution.

"We compromise; it's whoever has the best solution," he said. "It's really the only way to get along. Although sometimes, when you're extremely busy, things get hot and heavy. But that happens in any business."

Handing down a family-owned company was not a difficult transition for the Stocks, but for many family-owned companies, it is, according to the IFOB. More than 30 percent of family-owned businesses go to a second generation; 12 percent survive to see a third generation take control. Only 3 percent survive to a fourth generation.

Michael L. Fay is senior partner in the private clients department of Hale and Dorr LLP in Boston. He advises family businesses on issues such as succession.

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