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Successfully blending family, business poses unique challenges

Family businesses pose unique opportunities and challenges. And now there is a Family Business Institute at Millsaps College designed to help.

“As a banker, I dealt with a lot of family businesses,” says Howard L. McMillan Jr., dean of the Else School of Management at Millsaps College. “Several years ago Hal Miller, who is the director of the new Family Business Institute, came to me with this idea. Hal, a long time practicing attorney with Butler Snow, came out of a family business and has dealt with family businesses throughout his career. Both Hal and I recognized some unique problems in family businesses that don’t very often get addressed in the academic or even the professional world. There is no venue for family businesses to get together to talk about common problems and possible solutions. We felt it would be a good idea to form a Family Business Institute at Millsaps.”

‘Tremendous economic impact’

A significant percentage of the businesses in Mississippi are family-owned businesses. There are some large new manufacturers that have located in the state like Nissan and Toyota. But McMillan said year in and year out, most of the new jobs in Mississippi are created by families.

Ergon was a family business that grew into a large industrial complex. The Howard family in Laurel has created thousands of jobs with various subsidiaries of Howard Industries.

“Family-owned businesses have a tremendous economic impact on the state,” McMillan said. “The Family Business Institute is designed to help family businesses at all stages from startup to middle range to large, very successful family businesses identify common problems they all have and then through discussion and input from various experts come up with solutions.”

The institute creates a networking opportunity. If people have had a specific problem, they can ask other family business owners how they have handled similar issues.

There aren’t many similar organizations geared towards the unique needs of family-owned businesses. The best known one is at the Harvard Business School.

“We have used them somewhat as a model for what we are doing, but we try to tailor ours to the unique needs of Mississippi businesses,” McMillan said. “We are having four seminars per year. Experts to come in and talk about topics such as succession planning, resolving family disputes, adding non-family members to your board, managing continuity and change. Then we also have a panel of family business owners who come in and share experiences.”

On April 29 the school held its second seminar. The day-long program featured Buster Bailey, H.C. Bailey Company, as the keynote speaker.

Sparking success

Typically, a family business starts when someone has a great idea, implements the idea, starts a company and it begins to grow.

“They hire more help or bring family members in to help,” McMillan said. “As the business grows, you have to make decisions. When it was a startup, it was fairly easy to manage. As it is gets larger and more complex, you must decide if the entrepreneur can provide the management needed. The company may need to bring in professional management. If so, how much do you pay? Do you put them on the board? How do you evaluate outside management? What kind of safeguards do you put in place to protect the family’s interest from misappropriation by an outside, non-family manager? That is a significant problem family businesses face.”

Other issues can include sibling rivalry among children, and a parent being too dominant so children can’t give input. Or the business can thrive, but family members have other career interests and no one in family wants to take over management.

“There are complex issues that don’t necessarily come up in large, publicly held corporations,” McMillan said. “Usually family businesses are successful because they have such a strong focus on what they are doing. This is someone’s vision and dream. He or she has almost put their total life into it. That brings up one of the problem. Their own personal identity gets involved with the business and its success.”

Personal connection

Miller, of counsel with Butler Snow attorneys in Jackson, has unique qualifications to be director of the new Family Business Institute. He grew up with a very successful family business, Miller Transporters, a nationwide tank truck carrier headquartered in Jackson that has been in business 65 years. The company is in its second, third, fourth and fifth generation of ownership and the second and third generation of management.

“I’m not saying we are perfect, but we have done well,” Miller said. “We just changed the president from the second generation to the third generation. Family businesses are unique. The average family business owner thinks he is all by himself. No one else has the same problems. He has no one to talk to. We are trying to resolve that and give him someone to talk to. I think it is a very needed thing.”

Miller worked at the family business from a young age. But he chose a career as an attorney rather than continuing to work at Miller Transporters. In 49 years of practicing law, he often helped represent family businesses. He also helped mediate and solve family disputes, keeping the companies out of messy court battles.

“Family business has been my life,” Miller said. “That is why in retirement I helped found the Family Business Institute to provide a forum for owners of family businesses to come and address their unique problems. It is for owners and high-level employees of family-owned businesses. Family businesses are unique and they need to be recognized as such and treated as such regarding the laws of human dynamics.”

Historically in the U.S., family-owned businesses represent 85% of the total. A classic example, Wal-Mart — a family-owned business still controlled by the Walton family even though anyone can buy stock in it.

Problems? Set policies

“If it isn’t part of a chain, it is probably owned by a family,” Miller said. “The importance of what we are doing is offering a forum for people who have the same problems to come together and talk about them. All family-owned businesses have the same problems. One is who is going to succeed daddy. Most family businesses follow patterns of challenges like succession.”

It can be difficult for successful business people to relinquish power. But it can be bad for the next generation if they have to wait until they are near retirement age themselves to have control of the company.

“You can’t have someone sitting there until they are 85,” Miller said. “One thing that can be helpful is putting a mandatory retirement age on employees. Miller Transporters did that, and that is the reason we recently switched from second- to third-generation management. Our mandatory retirement age is 70. Another thing we now require is that our children be college graduates and work somewhere else a few years before coming into the family business. Three of my grandchildren are at Ole Miss and will have to go out and work somewhere else before coming to Miller Transporters, assuming they ever will come in to work at Miller Transporters.”

Another suggestion involves resolving disputes. It can be difficult for family members to communicate when there is a dispute. It might be helpful to bring in a third party consultant.

Having common sense rules can also help a family business.

“If you and I sit down and establish a rule before an incident occurs, it isn’t personal,” Miller said. “Don’t wait until the problem occurs. It is good to have rules and procedures including who is the president and that kind of thing so you are not arguing every day about who is running the place.”

Sometimes women family members can feel left out and marginalized, particularly in businesses that have been traditionally dominated by males. Miller said treatment of women family business members is improving.

“It is a whole lot better than 30 years ago,” Miller said. “I see some ladies in Jackson now running businesses their fathers started. It is getting better. But long term, statistically the female is in second place. There is still that distinction. Some things die hard.”

Family businesses have unique opportunity. If things work out correctly, you get to have a close association with family members rather than be spread across the country only visiting infrequently.

“When it works well, it is really nice and you are proud of your family,” Miller said. “My father had six sons. We have gotten to live together in the same city as opposed to one in New York and one in San Francisco. The reverse side is a family business can be hell on wheels. A lot of them don’t deal well with the challenges.”

For more information about the Family Business Institute, call the Else School of Management (601) 974-12

Contact MBJ contributing writer Becky Gillette at 4becky@cox.net.50.

About Becky Gillette

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