There’s no business like a family business, as anyone who’s ever worked in one knows.
Dennis Zaverl of Zaverl & Associates, a Peninsula-based consultant who has worked with family businesses for more than 30 years, ticks off a few of the challenges faced by an enterprise in which members of the work force are related to each other: Dealing with the entitlement mindset of offspring who expect to take over the business without paying their dues; judiciously employing, promoting and compensating those offspring without instigating a major case of sibling rivalry (“In theory, we all know they’re equal, but you can only have one president.”); and the influence of husbands and wives not employed by the business.
He compares a family business to a marriage, a unique entity complete with its own personalities, quirks and compromises.
“There’s that familiarity that tends to push it out of the business environment,” he says. “That’s probably why it’s so difficult and why there’s such a small percentage of people who really do plan for the future.”
Zaverl is one of the sponsors who will speak at the Family Business Academy, a 10-week noncredit course that beginning Sept. 12 will meet Wednesday nights. The class is the latest offering by The University of Akron’s Center for Family Business, founded four years ago as an outreach activity of the College of Business Administration’s Fitzgerald Institute for Entrepreneurial Studies.
“Russ Vernon of West Point Market in Akron was really the one who came up with the idea,” says Susan Hanlon, the center’s director.
Vernon, she says, had attended family business forums and programs across the country and thought the regional business community would benefit from an affordable counterpart.
The center’s mission, Zaverl says, is to help families do the planning they never seem to get around to, whether it’s because they’re too busy putting out fires at work or just don’t think it’s necessary.
“The purpose of the Center for Family Business is to help you realize the issues that you’re facing and give you some education to handle them,” he says.
According to Hanlon, the center’s past programming consisted of 10 unrelated workshops scheduled throughout the year for its members. They began with a short presentation by an expert on topics ranging from succession planning to mentoring, followed by roundtable discussions — one for founders and one for successors — and a discussion of solutions formulated by each group. Although the workshops were well attended, Hanlon didn’t believe members were using what they learned when they went back to work.
She hopes to change that by replacing the workshops with the Family Business Academy. The class will differ from previous center offerings in that it will focus on single topics — the first half will be devoted to strategic planning, the second half to family meetings.
“Those are the two things that the research has shown make the biggest difference to the continuity and the performance of family businesses,” Hanlon says.
Participants will also be given out-of-class assignments, such as scheduling a family meeting, conducting it and preparing to discuss the outcome.
“What we’re trying to do is to get them to implement some of this stuff,” Zaverl says. “Most people have a difficult time taking the time to do that.”
Other sponsors scheduled to speak to the class include an attorney from Buckingham Doolittle & Burroughs, an accountant from Renacci Corwin & Co., a representative of the Akron Regional Development Board and College of Business Administration faculty members.
Zaverl’s forte is strategic planning.
He has conducted center workshops on topics such as passing on assets and equity to children without passing on control or jeopardizing retirement security; retaining key employees when the reins are passed from one generation to another; and creating an independent board of advisers to help guide successors. But he also tackles “soft issues” such as eliminating the squabbling between heirs apparent and preventing two minority shareholders from ganging up on a third.
“Soft issues,” he says, “drive the hard answers — documents, procedures and agreements.”
The hard answers, he says, differ from family to family.
“You have to take it on a case-by-case basis.”
Those soft issues are popular topics in the “affinity groups,” groups of member founders and successors that meet outside of center workshops.
“The idea is to talk, in an informal setting, to someone who’s in a similar situation as yours,” Hanlon says.
Although meeting schedules fluctuate, Hanlon says successors generally meet once a month, while founders get together three or four times a year.
Bernie Krzys, president and founder of Trenchless Technology, a Peninsula-based publisher of trade magazines for the drilling industry, says a group gathering “is almost like an Alcoholics Anonymous meeting.”
Zaverl compares it to family therapy.
“People are very open, much more open than I would have ever realized,” Krzys says.
Krzys, one of the center’s charter members, joined because he was looking for guidance in passing along the business to his son, while at the same time ensuring a comfortable income for his golden years.
“It’s a fairly complex issue,” the 61-year-old says. “How do you, in effect, guarantee your retirement plan’s going to be there, and how do you maximize it so you don’t have all these taxes that eat everything up?”
But Krzys found that the benefits of attending workshops extended beyond obtaining strategic planning advice. He says the association has been a positive influence on his professional relationship with son, Rob, Trenchless Technology’s 31-year-old marketing manager.
“It’s hard to say, but perhaps the involvement with the University of Akron has made us both look at some things differently,” he says. “I think we’re both much more respectful of each other as businessmen rather than as a father and son. Those kinds of issues really get in the way in a business environment.”
Krzys adds that one weekend-long workshop he attended with his brother, Richard, the company’s 68-year-old associate publisher, and their wives improved relations between the couples.
“That particular weekend, we really opened up a lot about how my brother would go home and talk to his wife about things, and my wife would hear from me at night, that kind of thing,” Krzys says.
The men discovered that griping to their wives about each other negatively affected how the women, who enjoyed a good relationship with each other, felt about their brothers-in-law.
“(The programs) made you think about these things that you didn’t even realize were issues,” Krzys says.
Glenn Leppo, president of Leppo Equipment, a construction equipment distributor with locations in Akron, Canton, Youngstown and Wooster, says his involvement with the center helped he and older brother, Dale, work through a difficult situation with their sister.
She wanted to leave the company after she was struck with a life-threatening illness in 1999 but still retain ownership of her stock. The decision to buy her out was based on what he learned in center workshops.
“My sister had previously taken a sabbatical from the company for about six months and went sailing,” Leppo says. “Now she wanted to get out of the business and go sailing again. Well, how would I feel? Family business — at least our approach to it — is essentially a full-time job, working anywhere from 50 to 70 hours a week, depending on the time of year, those kinds of things.
“Working like that and sending a good chunk of money off to your sister, who’s sailing around the Caribbean, probably wouldn’t sit very well.”
Leppo admits that striking a deal with his sister was “a bit of a struggle.” But he says she understood that the resentment generated by her continuing to receive dividend checks would build to the point where her brothers might, say, give themselves hefty raises that would eliminate profits.
“She and I have always been very close,” he says. “It was the right thing for our relationship.”
The stories of Krzys and Leppo support Hanlon’s assertion that, contrary to what some people think, the majority of center members do not represent family businesses fraught with the J.R.-and-Bobby-Ewing-style dilemmas depicted on “Dallas.” Krzys likens attending a center program or affinity group to visiting a marriage counselor before wedded bliss is threatened.
“Typically, the families that come to any kind of program, they’re the very healthy family businesses,” Hanlon says. “The ones that are in crisis can’t get it together enough to even come — or they’re so miserable that they won’t.” How to reach: University of Akron’s Center for Family Business, (330) 972-7685
Lynne Thompson is a regular free-lance contributor to SBN Magazine.
