By Shane Hoover
Posted Jul 16, 2013 @ 05:40 AM
Electra swished the thick July air with her tail. A former racer, the 14-year-old thoroughbred posed in the stable with no hint of movement in her powerful legs.
Dr. Sarah Cipar steadied a film plate next to the brown knob of Electra’s right front knee. Twin sister Dr. Amanda Company aimed her portable X-ray machine.
Cipar and Company founded CoTwins Veterinary Care a year and a half ago as a mobile service, then opened a clinic in June at 4326 Dressler Road NW in Jackson Township.
Becoming vets fulfilled a childhood dream for the 27-year-old sisters, who grew up on a farm near Boliver.
It also launched them into the rewarding, frustrating, sometimes crazy, world of family business.
“We always knew that we wanted to go into practice together,” Cipar said. “…It’s going well, so far.”
There are 5.5 million family-run businesses in the United States, employing 62 percent of the nation’s workforce and generating 64 percent of gross domestic product, according to Family Enterprise USA, a lobbying group.
The companies range in size from giants such as Walmart and Ford, where the founding families still exercise control, to small ventures like CoTwins Veterinary Care.
Despite the prevalence of family businesses, the odds are against one becoming a multi-generational success: 70 percent fail or are sold before the second generation can take over, and only 10 percent are still operating by the third generation, according to Harvard Business Review.
Many fall victim to what attorney Bea Wolper calls the “Four Ds:” Death, disability, divorce and dissension.
“The most interesting thing with the issues in family business is it doesn’t matter what size it is,” said Wolper, who is a cofounder of the Conway Center for Family Business in Columbus. “It has to do with family dynamics.”
Family was always part of the plan when buddies Fred Horner and Jeff Rupert launched their own roofing business 25 years ago with $9,000 and three pickups.
Today, Advanced Industrial Roofing at 1330 S. Erie St. in Massillon has 100 workers, including Horner’s wife, son and daughter and Rupert’s two daughters, along with a number of employees who have been with the company so long that Horner says they’re almost family.
“Our goal from the beginning was to make this a legacy for our children,” Horner said.
And that means planning for the future.
When Horner and Rupert founded the company, they had a simple buy-sell agreement outlining what would happen if one of them left the business.
As the firm and their families grew, the partners updated the agreement and wrote a succession plan to include more family members.
Trade groups, in their case the Ohio Roofing Contractors, can help with advice on succession planning, Horner said.
“As morbid as it sounds, you always have to plan for what happens when you’re not there,” said Daniel Van Der Vliet, director of the Family Business Initiative at the University of Vermont.
Insurance is important, and not putting a succession plan in writing invites legal fights between family members.
Owners also have to realize that for them to derive lasting value from a business when they retire, they must be replaceable, either by the next generation or a future buyer, Van Der Vliet said.
Family feuds can cause problems in a business, if not its outright destruction. Adidas and Puma exist as rival shoemakers because brothers and business partners Adolf and Rudolf Dassler couldn’t get along. The Teutuls of “American Chopper” showcased their dysfunction on cable television.
In a good partnership everyone has to know his or her role, Horner said.
At Advance Industrial Roofing, he runs the company as the chief executive and president, while Rupert is vice president and manages million-dollar projects.
They’ve had their disagreements over topics ranging from daily routines to the direction of the company, Rupert said, but “nothing that wasn’t worked out immediately.”
“We know our roles and we stay within those roles,” Horner said.
Cipar and Company also have learned to divide responsibilities at their clinic, which lessens the natural tendency to slack and let a family member do the work, Cipar said.
She handles the medical records and Company looks after the finances. “Everybody does their part,” Company said
Hiring an employee, even at a family business, just because they’re a relative is a recipe for failure.
As a family business attorney, it’s something Wolper has seen before.
“Blood employment never works,” she said. “It has to be based on ability.”
By focusing on the health of the business, owners benefit their family in the long run. But, running a company just to take care of relatives won’t leave anything for the next generation, Wolper said.
Horner recently hired a project manager for the architectural sheet metal part of his business. Even though his son, Ryan, works in that section, he wasn’t ready for the job.
“You can’t just put people there because of what their last name is,” Horner said.
A family constitution that spells out the experience, education and skills needed to work for the business can improve the hiring process, Van Der Vliet said.
And employees who cause problems need to shape up or face dismissal, whether they’re family or not.
“Good management is good management,” he said.
Of course, for the next generation to take over, they have to be trained.
Jan Walther’s family has been in the restaurant business for almost a century, starting when his grandfather opened Walther’s Cafe in 1914.
Jan’s twin daughters Terra and Tana went to college, but each found her way back to the family trade. Last month, the twins and their father opened a Pita Pit franchise at 1102 N. Main St. in North Canton. They also run a Pita Pit in Kent.
“I’m third generation,” Jan Walther said. “These two also work with me and they’re going take over, hopefully in the near future, and it will be the fourth generation.”
“I think I’ve always wanted to do it,” said Tana Walther, recalling how she would write “own Walther’s” on grade school assignments about her future career.
Some businesses require relatives to get experience outside the family business, be it in college, the military or at another company, Wolper said.
Horner said having the next generation work outside gives them a taste of the business world and shows them how good they have it in the family business.
“Of course, you’re working with family, but it’s not fun and games,” he said. “It’s a serious business. We don’t expect someone else to do our jobs for us.”
KEEP IT SEPARATE
The good part of running a family business is getting to work with family, Jan Walther said. “When we communicate, it works great. Sometimes we don’t communicate.”
“We can argue back and forth, and it’s not an issue,” Terra Walther added. “It’s resolved, it’s not something we’re going to hold.”
“It has it’s ups and downs,” Tana Walther chimed in, laughing.
“Their mother is, I guess, our mediator,” Jan Walther said.
Successful family businesses have open communication, but there also has to be time away from the daily grind.
Horner said he and his wife, Dawn, don’t talk business at dinner or when they go away on a trip, although he confesses to peaking at his email.
“You have to have some work-free time,” he said, “because it will drive you crazy.”
Reach Shane at 330-580-8338 or firstname.lastname@example.org or on Twitter: @shooverREP