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Business//Training

words by > Timothy S. Mescon Ph.D.

Keeping it in the Family

*Creating a successful family business is one thing. Making it last through the generations is another.

Today, two out of five Fortune 500 firms are family businesses, including Ford Motors and Wal-Mart. In fact, the majority of all US companies are owned, operated or otherwise managed by mothers and fathers, sisters and brothers, sons and daughters. Clearly, family ties can make business strong. But they can also make business more complicated—a delicate balancing act of family members, heirs, capital, resources and management.

What is so astounding is the ability of a select (and very small) percentage of family businesses to make it to the third generation. Here’s a look at two great family businesses that made it down the chain, and one that struggled.

McKee Foods

Almost 75 years ago, O.D. McKee and his wife, Ruth, who had spent a few years in the snack distribution business, bought a small bakery on Main Street in Chattanooga, TN. With plenty of fits and starts, this was the beginning of McKee Foods Corporation, now a third-generation family business, headquartered in Collegedale, TN, with production facilities in Gentry, AR, and Stuarts Draft , VA. McKee Foods is best-known for its line of Little Debbie snack cakes, America’s leading snack-cake brand in unit sales. McKee also produces 18 diff erent family pack snacks and granola cereals under the brand name Sunbelt. Th e company employs more than 6,000 workers and has annual sales in excess of $1 billion. According to president Mike McKee, “In a family-owned business, the owners are seen as real people. It’s easier for employees to feel loyal to someone they know.”

Tanimura & Antle

In an era of corporate farming, Tanimura & Antle is proud to be a family aff air. In fact, the company is the largest family-owned and operated produce company in America’s “salad bowl,” the legendary Salinas Valley of California.

For the Tanimura and Antle families, fresh produce is their life’s work. Family members manage every aspect of the business, including growing, harvesting and shipping. Visit any day, and you’ll see senior family members on the farm, working, supervising and, most importantly, imparting their priceless knowledge to the next generation. Th e two families blend three generations of wisdom, experience, innovation and creativity. Th e company was the industry leader in the development of the pocket-sized, seedless watermelon, a great testimony to ongoing innovation in the tough, competitive global world of produce. Today, the company ships more than 150,000 cartons of produce daily.

Adelphia Communications Corporation

Adelphia Communications Corp. founder John Rigas and his son, Timothy, were recently convicted of bank and securities fraud for looting the cable company and duping its investors. Th e elder Rigas founded the company in 1952 and built one of the nation’s largest cable empires. Timothy became so concerned with his father’s excessive spending that he limited him to withdrawals of $1 million per month. Since 2002, until the trial, a tremendous internal battle took place between employees at Adelphia and the founding family, concerned with the management and fiscal soundness of the enterprise.

The Punch Line

Great and long-lasting family businesses are not the norm; they are, in fact, the exception. Managing the dynamics of multiple generation families and their businesses is a huge and daunting prospect that has crippled many. Ongoing challenges relating to family dynamics, governance, estate taxes and non-family executives remain intimidating to many. But these families and their businesses remain a critical part of the economic engine in the US and around the world.

Did you Know?

> 80% of the world’s businesses are family-owned.
> In just the past five years, Americans have started more than three million family businesses.
> Family-run businesses account for half of the nation’s gross domestic product.
> Around 60% of all public companies in the US are family-controlled.
> Family-owned businesses account for 60% of total US employment, 78% of all new jobs and 65% of all wages paid.

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