Family
business at
a glance
succession plan in place is yesterday. A succession “Family businesses can look at the long term and
plan not only helps a family run the business in case make smart moves; they’re not playing games with
of an unexpected death, it also assures the older gen- Wall Street analysts,” says Fleming. “When they’re run
eration that the next generation is trained and ready right, they can make more changes and can grow
WHILE MANY people are sur- to keep the business running. faster. When they’re run right, it’s the most powerful
prised that most family busi- If mom and dad are approaching or have kind ofbusiness there is.”
nesses don’t make it through the passed retirement age, letting them know it’s time
third generation, the fact is that to go puts stress on both generations, says Kent The ultimate payoff
family firms have more lon- Lutz, a Costco member and director of the Goering At the end of the day, when the business closes
gevity than other businesses. Center for Family & Private Business at the its door, many family members say there’s no better
Other research, from the University of Cincinnati. Leaving the business is workplace than a family business.
Family Firm Institute, reveals easier if the older generation asks these questions: “There is a stronger sense of achievement and
the following: Do we have a passion outside of the business, such satisfaction, and a stronger sense of a common
• Family firms comprise 80 as travel, philanthropy or another business? Will we goal,” says Mark Sinclair, whose family operates
to 90 percent of all business in have financial security once we’re no longer run- Kaufer’s Religious Supplies. “There is a stronger
North America. ning the business? Does the next generation have sense of the history, of the others who have served
• 85 percent of family-owned the interest, passion and desire to be there? If the before us. It’s a matter of pride in the family and
firms that have identified a answers are anything but yes, it will be harder for being able to work with the people that you love,
successor say [that person] will the would-be retirees to let go. admire, respect. If you ever thought of your father as
be a family member. If the parents have the answers they need but an icon, then being able to work side by side with
• More than 30 percent of still don’t want to let go of the business, Fleming, a him is a privilege and honor that is hard to put to
all family-owned businesses Costco member, suggests introducing the concept words, but truly is the best feeling in the world.” C
survive into the second genera- of graduated succession. The
tion. Twelve percent are viable younger generation encour-
into the third generation, with 3 ages the older generation to
percent of all family businesses take a week off. That’s followed
make it to the fourth-generation by two- and then three-week
level and beyond. vacations. The older genera-
• 19 percent of family business participants have not com- tion should gain awareness of
their successors’ competence
pleted estate planning other than as the business continues to
writing a will; only 37 percent
have written a strategic plan. run smoothly in their absence.
Successful succession
MANY FAMILY businesses are handed down to the next generation through a formal, legal process. Experts say this is essential
for larger corporations, where significant assets are involved.
But for smaller companies, the transition from generation to
generation is sometimes as informal as a handshake or a discussion at the dinner table. Succession is often handled like other
family matters: Children assume certain duties, parents have the
final say and, ideally, everybody is satisfied.
A good example is Kaufer’s Religious Supplies, a family-owned business with stores in Seattle, San Francisco and
Kaufer’s
Religious Supplies
Seattle, WA
(206) 622-3100
www.kaufersonline.com
Member at Seattle, WA
Spokane, Washington. The company, founded in 1904, has been
passed down over four generations. Six family members are still
involved in day-to-day operations.
GARY BENSON PHOTOGRAPH Y
Jim Sinclair, company president, says that succession at Kaufer’s has mostly been a
“natural evolution of responsibilities.” One generation gradually passed on duties to the next,
until formal papers were signed and stock was divided with little pomp or circumstance.
“If there was any money that changed hands, it was nominal,” Sinclair says. “The idea
was more for the family to carry on, and to not make roadblocks for them to do so.”
For the current generation, succession plans were made during an impromptu family meeting
involving Jim Sinclair; his father, Lee; and his siblings Mark and Michele. “It was very informal.
We were in the office, he [Lee] said, ‘This is what I would like to do, does anybody have any
comments on it?’ Mark and Michele agreed, and it just worked out,” says Jim, adding with a
laugh, “I don’t think either one would want my job.”
Kaufer’s Religious Supplies
has been in the family for
four generations. The current generation includes
Michele, Jim (center) and
Mark Sinclair.
He continues, “If there were people other than family, it would throw a different dynamic
into it. From reading about this, professionals encourage a more formal process, with experts
such as lawyers and accountants. We didn’t find it necessary to go that route.”
At Kaufer’s, Sinclair adds, “Nobody is in this business for the money. We’re in it for a lot of
other reasons.”—Tim Talevich
For more tips from members
and a complete list of what
author Quentin J. Fleming
identifies as “The Seven Deadly
Sins That Destroy Family
Businesses,” click on “Costco
magazine” at costco.com.
