Boomerang CEOs

(page 3 of 3)

Browse Issues

Browse the BusinessWeek Archive

Related Items

• Starting a Business Instead of Retiring

Lane and Tara Nemeth: One brings money and experience; the other brings a willingness to learn Ericmillette.com

Nicole and Steven Bernand: "Things are starting to smooth out," he says, "but there have been times when we've wanted to kill each other" Ericmillette.com

Story Tools

• post a comment
• e-mail this story
• print this story
• order a reprint
• digg this
• save to del.icio.us

The device turned out to be a temperamental space hog that took more time to roll dough than Allyson needed to do the job by hand. Allyson resumed her low-tech ways, and they sold the machine at a $1,000 loss.

From that point on, Allyson demanded that Sondra respect her expertise. "She had to get used to not having the final say about everything," says Allyson. Sondra agreed, and they set a new rule: Any purchases over $1,000 must be approved by both. They codified their professional relationship, too. At work, Allyson calls her mother by her first name. They have a ten-minute chat by phone or in person every morning and touch base again in the evening. Each takes the lead in the part of the business where she's stronger, but only the smallest and most routine decisions are made unilaterally.

Dual-generation companies must also have a plan for managing emotional eruptions. When the Ames women feel a confrontation looming, they'll wait to hash the matter out until employees aren't around. The Bernards are used to boisterous dealings and expect their staff (which includes relatives) to roll with the tide. But they will put an issue on hold for a few days if tempers get too high.

AGE-OLD ISSUES

As with any startup, the founders in a family business should plan for the unexpected—say, if sales grow faster or slower than anticipated or if a buyout offer materializes. They must also plan for the time when one party wants to leave the company. Parent-child businesses have an extra layer of complexity because the partners are at different stages of life, with widely divergent lifestyles and financial needs.

Those disparities are apt to grow with time, notes Bryck. A parent itching to do something new at 60 might not feel so comfortable with financial risk ten years later. And children at 50 are likely to have different desires than 40-year-olds, perhaps wanting to take charge once and for all or bring their own kids into the business. The reverse can happen, too: A parent who had intended to step aside might have a hard time leaving, or a child who thought running a business would be a lifetime passion might change his mind after starting a family. Bryck suggests agreeing on an exit strategy and then figuring out what to do in case of an unexpected illness or problem. His favored approach is for the child to gradually buy out the parent. "This way the parent is covered and the kid is free to do what he wants with the business," he says.

At Wonderland Bakery, Allyson's youth has always been a factor in the company's long-term planning. Sondra worries her daughter will regret trading the social and educational pursuits of youth for a baker's long hours. Indeed, while Allyson calls the bakery her baby, she can tick off other things she'd like to do in her 20s, like traveling or furthering her culinary training at Le Cordon Bleu in Paris. So the two have settled on a way to let each of them either wind down or stay fully engaged. Plan A, says Sondra, is for the pair to work really hard for five years, then sell part of the business. Both would then withdraw from daily operations while staying involved in some manner, perhaps with Allyson as spokesperson or executive chef and Sondra as a consultant on branded products. But there's also a Plan B: a buyout agreement if mother or daughter wants to keep running the company after the other is ready to ease off.

The Bernards don't have that sort of formal arrangement at Late July, but they have discussed the future. At minimum, they know they want to keep the business in the family. "My plan would be to step back eventually and pick and choose what I do," says Steve. "But Nicky would like to continue growing the company. If she wants to buy me out over time, I wouldn't have a problem with that." The Nemeths might face a tougher transition. Neither mother nor daughter can imagine Petlane without Lane. "My mother will retire when she's dead," Tara says. Both say Lane will take an advisory role in 10 or 15 years, when Tara becomes CEO. Whether Lane will want to stay away from day-to-day operations is another question. "I cashed out once, and it was not very fulfilling," says Lane. "It's more fun to run things." And she adds frankly: "I haven't thought at all about how the money would work." She'll only allow that, if she does trade in chew toys for golf clubs someday, the two will arrange a buyout or take the company public. "I'm just confident we'll work it out," she says. Lane's confidence in the future may reflect no more than her best intentions. But her faith in Tara is the kind you can have only in a partner you've raised from a pup.

Back to BWSmallBiz February/March 2008 Table of Contents