Family businesses fight long odds to become legacies
Two-thirds of family businesses fold before reaching the second generation, and just 12% make it to the third. Do you own a family business? Share your thoughts on the subject.
From James Stephenson, Twin Falls, ID Working within and for family businesses has been an interesting experience for the last 25 years. I have seen small family run businesses grow and eventually be bought by large mega-corporations; I have seen some businesses slowly grow and remain in control of the original founder's family through several generations; and , fortunately I have seen several not survive beyond the owner because of a wide variety of reasons.
The most common reason for failure I have found is that there are either no qualified family members prepared to take over the business, or just a plain lack of interest in the business from younger generations.
Business founders and owners need to take a long hard look at what they want their legacy to be and begin preparing for that eventual transfer of ownership at a very early stage of the game. I would even go so far as to say that owners of businesses need to start planning for the eventual transfer of ownership the very first day they open their doors for business. It will come faster than you or I can ever anticipate.
James Stephenson
http://www.scc-i.com
From Jeff, Encinitas 92024 The key to successfully growing a family owned and operated business is educating the family, not just on the specialty nuances of your business, but on business fundamentals…. http://www.readtheanswer.com/index.php?RTA=web2
From Tony Vignieri Dear Editor:
Your article of July 2lst (?Family businesses fight long odds to become
legacies?) pinpoints some of the most pressing challenges faced by
family-owned businesses, particularly the issue of smooth and successful
transition planning.
There may or may not be a gene for leading a thriving family business, but
the fact is that not all succeeding generations come equipped with the
founder?s vision, savvy and ambition to keep a family business going. Most
importantly, perhaps, must be the will to prosper. After that, valuable
resources are available to leaders of family-owned business, such as the
increasingly popular peer-group approach to coping with significant issues
and challenges.
As the article notes, ?In a time of economic uncertainty and rapid
globalization, keeping a family-owned business in your name for another
generation can seem like a quaint goal.? Many CEO members of Vistage
International (www.vistage.com) have to deal with issues unique to
family-owned businesses, but they benefit from the experience and knowledge
of other chief executives who have ?been there and done that??thereby
avoiding the mistakes others have made and exploiting the most successful
techniques for keeping the family business going, generation after
generation.
For those wishing to learn more about applying time-proven techniques to
handle family-specific issues, I?d suggest reading ?Two Succession Planning
Scenarios: Family or Key Managers?
(http://www.vistage.com/featured/two-succession-planning-scenarios-family-or
-key-managers.html). As Professor Charles Matthews notes in your article,
?Even an informal plan gives you a great chance to survive the transition to
the second and even third generation.?
Tony Vignieri
Chief of Corporate Communications
Vistage International
From Denise Dupree Young, San Leandro Ca My father started business in 1972 Downtown Oakland Ca. 18,000 sq ft., building. Retail furniture store. Since then we have had several satelite stores, appliance as well as waterbeds. Now with my father 70 years old, we have been in our current location for 12 years. Dad comes in everyday on time does whatever we ask him to do, and does it all for nothing. He is the greatest employee we have. I have been with my father since 1980, my sister has been with us for about 11 years, and I hired my niece 2 years ago. We all enjoy working together, but it does have its ups and downs. No different than any other job.We have now been in business for 36 years and were looking to do another 36 at least. In any business today you have to have CUSTOMER SERVICE, and there isn't a whole lot of that out there anymore. You call the water company you get an automated voice, cable, electric company, banks and even the schools, its a same that we have allowed this to happen. No longer do you have that one on one with people, everything is dial 3 push the # then go to 9, etc etc. Your on hold for so long you forget where you called. So customer service is #1 with us.
Below is an article just written about my brother and me taking over the family business.
http://www.sun-sentinel.com/business/sfl-flzrendina0824sbaug24,0,2526237.story
Son steps up at private developer after father's death
Twenty-something Richard Rendina and his brother, Michael, take the helm of their father's real estate development company after his death
Paul Owers, staff writer
August 24, 2008
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In the summer of 2001, Richard Rendina completed an internship at Lehman Brothers, a Wall Street investment bank. His mentor, Andrew Malik, showed him how to be a banking analyst but made sure he knew a few other things, too.
Don't shuffle your feet when you walk or shake hands with gloves on. Never sit behind your desk when meeting with someone, and always try to return phone calls that same day.
"I found value in it," Rendina said, laughing recently at the memory of Malik's often-blunt suggestions. "He was never hesitant about teaching me life lessons."
Rendina proved to be a quick study, later returning to South Florida to work at Rendina Cos., the real estate development firm founded by his father, Bruce, in 1998.
He spent 2 ½ years learning the family business, then — a month shy of his 27th birthday in December 2006 — ascended to CEO following Bruce's death.
Not as gregarious as his father, Richard is nonetheless bright, personable, pensive and competitive, friends and colleagues say. He leans on a four-person advisory board but makes his own decisions. His leadership of the privately held company will be tested by a souring economy and a slipping commercial real estate market.
"I'm blown away by how well he's done with all the pressures on him," said Pat Conway, a longtime family friend who serves as a consultant to the company. "Talk about carrying a lot of weight at an early age."
Rendina Cos. of Jupiter and La Jolla, Calif., builds all types of buildings but focuses on medical offices. It has completed 79 projects nationwide valued at more than $700 million and is working on 15 more developments worth in excess of $190 million.
Its signature South Florida developments include the commercial buildings at Abacoa in Jupiter and the expansion of Wellington Regional Medical Center in Wellington. The 51-person firm also is negotiating with North Broward Medical Center to develop a three-story building adjacent to the hospital in Deerfield Beach.
Before a recent senior staff meeting at the company's plush Jupiter headquarters, Richard exchanged friendly banter, teasing one of the other executives who had been featured on local TV news the night before. He then grew more serious, going around the room for updates on new business and asking if he could make any phone calls that might speed up talks with potential clients.
Kevin DiLallo, chief executive of Wellington Regional, said Richard may be young, but he's not at all overwhelmed.
"I don't know that age is an issue," DiLallo said. "He's a smart guy, a good listener. He has a very good understanding of the business. He has all the attributes he needs to have."
Richard, now 28, is the oldest of Bruce and Marji Rendina's three sons. Michael, 25, is senior vice president of operations at Rendina Cos., and David, 20, is a junior at Florida State University.
When Richard turned 15, Bruce insisted that he get a summer job with a property-management firm. The not-so-glamorous gig had him pressure-cleaning buildings and removing spider webs from light fixtures in the parking garages.
He graduated from Cardinal Newman High School in West Palm Beach and the University of Notre Dame, where he played intramural sports and majored in business management.
Bruce was a client of Lehman Brothers, and his contacts there helped Richard land the internship seven years ago. At first, Malik said, he and others in the office resented having to work with the son of a wealthy businessman.
"But Rich handled himself so elegantly that very quickly everyone had to look beyond that," said Malik, now chairman of a privately held investment bank in New York. "He instantly won respect. Here was this kid of privilege, but he was willing to do the hard work and stay the hours."
The impressive showing earned Richard a full-time job at Lehman after college.Richard figured he'd have years to serve as his father's apprentice, but Bruce was diagnosed with a brain tumor in August 2005. Knowing he faced long odds, he told Richard and Michael he could sell the company or turn it over to them. They told him to keep it in the family.
Bruce died less than two weeks before Christmas 2006. He was 52.
For the first two months, Richard refused to take over Bruce's office. But one of his then-advisory board members, Larry Juran, pulled him aside and told him to move in, that there's nothing worse than a perceived void at the top.
"The office sitting empty was a constant reminder of Bruce's absence," Juran said. "And by Rich not moving in, it kind of sent a message that he wasn't fully taking over as chairman and CEO."
Bruce was a master at landing new clients, who were drawn to an equity participation program that didn't require them to invest any of their own cash. Richard has introduced other types of ownership structures, said Todd Varney, an executive vice president with the firm.
"He respects his dad's traditions, but at the same time, he has put his own stamp on the company," Varney said.
"It's almost like we're a start-up," Michael Rendina said.
The company recently completed negotiations for a fourth office building at the Wellington hospital. Rendina also announced plans to build a 100,000-square-foot office development in Royal Palm Beach. The anchor tenant, South University, is expected to move in late next year.
Richard Rendina said he is determined to build on his dad's success, not be defined by it.
He will never forget how his father put together real estate deals, taught him how to run a business and at the same time coped with cancer treatments. Above all, his dad always impressed upon him to treat everyone, from waiters to fellow executives, with respect.
"We told my father we'd love nothing more than to carry on his legacy," Richard said. "I was not interested in being a trust-fund baby, that's for damn sure. I want to be successful in my own right."
Paul Owers can be reached at powers@sunsentinel.com or 561-243-6529.
Richard Rendina
Age: 28
Company: CEO of privately held Rendina Cos. of Jupiter and La Jolla, Calif.
Founded by: His father, Bruce Rendina, in 1998
Primary business: Commercial construction of medical buildings
Education: Bachelor's degree in business from Notre Dame, 2002
Personal: Married to Trish