How can your vending business be successful during multiple generations?

 

A startling fact that pertains to any business when making the transition from one generation to another is that only 30% of family businesses make it to the second generation and fewer than 15% survive the third generation, according to the editor of Family Business Review. And only 3% of family businesses are still operating into the fourth generation and beyond.

 

Let me take a quick minute to introduce myself and my family. I am a member who represents the third generation of a family owned business. My grandfather started the family business back in the 1930's. The vending industry back then was rather new to the United States and the possibilities of tremendous growth were a driving force for my grandfather. He was passionate about this business and built his business from nothing to a midsize business.

 

One day, as we all have to face sometime in our lives my grandfather had to come to the realization that he would not live forever. He also envisioned that his passion to build this business could serve as his legacy.

 

Without planning, our family business would have had the odds of survival through multiple successions approximate those of playing roulette. My grandfather had to set a plan in place to ensure a smooth transition to the next generation and on.

 

• First thing he did was to designate a family member that will take over the business. For my grandfather this was the easiest decision to make for the next generation. In our family the second generation was an only child.

      My father was well diverse in the vending business as well as demonstrated that

he could grow the business. These elements are also important considerations            when picking the designated family member.

 

• Second thing my grandfather had to determine was which financial professionals best addressed transferring ownership of the business without incurring excessive estate taxes. (The earlier an owner addresses these issues the less burdensome this will effect the business and your heirs.)

 

• Thirdly it was important to my grandfather to define both the company's and family culture. It is essential to convey to your family your views on the importance of keeping the business, your legacy, in the family.

 

 

• Fourthly when addressing succession in a family business it is very vital to communicate with all members. This is a constant dialog that must take place between all members of the family and members of your staff. You can't over communicate the plan.

 

 

 

 

Mentoring: After the plan was in place, my grandfather took a step backwards; he allowed the plan to move forward. He decided to let the succession plan take place before something tragic would happen to him. His belief in the succession plan had to be in practice before my grandfather could no longer run the business. Years have gone by since the succession plan was implemented. My grandfather died at the age of 97. He believed in preserving his vending business, and he made sure that his succession plan was being adhered to by my father while he was still here. Now my father is in his late sixties, he has grown this business to a size my grandfather would be proud of. Today we have over 350 employees. 

 

Third Generation: Well we are now entering into the third generation as a family business. The odds of survival are slim. But the legacy, in which my grandfather and my father have set in motion, helps establish a good foundation to govern this vending business. We have bylaws that have been in place well before anyone of this generation was old enough to walk. Five years ago, the family designated me as the next successor to take over my father's role. This plan that has been our family constitution since my grandfather established it, has helped identify the paths to achieving a clear direction in maintaining and growing the family business. A family business can be successful if gone right in multiple generations, but I could not have thanked my grandfather enough to take the time, the gifting of assets, and the trust he instilled in his family. There is an old Indian passage that my grandfather used to say, "We never own the land we live on, we just borrow it from our children."

 

Written by: Heidi Chico, hchico@vending.com