ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Sunday, March 30, 1997 TAG: 9703290013
SECTION: BUSINESS PAGE: 1 EDITION: METRO
COLUMN: FAMILY BUSINESS
SOURCE: JOHN LEVIN
It's getting tougher to keep a family business, or at least to keep it in the family.
In addition to the usual pressures of operating a company, running a family enterprise includes uncertainties about the next generation of leaders, satisfying shareholders who are siblings as well as investors and guarding business practices that also are family traditions.
Despite that, an overwhelming 91 percent of family-owned businesses that replied to a new national survey expect their companies to stay in family hands, at least for another five years.
The survey, conducted for Arthur Andersen & Co., an accounting firm, and Massachusetts Life Insurance Co., found family businesses are larger (median annual sales of $9million), employ more people (typically 50 full-time workers) and are more likely to be led by women than nonfamily companies.
Roanoke companies' challenges
The survey included 54 Virginia companies, representing combined revenue of nearly $1billion a year, based on 1995 results.
And while maintaining family control is a primary goal of these companies, management and orderly passage of ownership "is particularly difficult in the context of the family relationships that exist in these businesses," said Chip Phillips, a tax partner and family-business consultant in Arthur Andersen's Richmond office.
In fact, family often gets in the way of business.
Despite that, three Roanoke companies seem to have met the challenges, all within the last few weeks:
Geoffrey Jennings has been named president of Frank L. Moose Jewelers Inc., an upscale retailer established by his grandfather, whose name the company bears. Jennings, after 25 years of caring for customers and gems, is assuming more daily responsibility from his father, Harold F. Jennings.
"It's not really a matter of changing anything," Geoff Jennings said of the downtown shop where jewels and watches sparkle inside mahogany cases. "It's a nice way of saying, 'Here, son, you've done a good job. I'll make you president of the business.'''
In a field where national jewelry chains are always trying to enter markets by buying the established merchants, it's especially important that the store stay in the family, Jennings said. "I have three children, and I'd like to have something for them to come into. That's pretty important to us."
Keeping traditional at the tavern
James N. Bullington remembers telling his son, Matthew, "just because his last name was Bullington and Bullingtons have always owned the Texas Tavern, it was his decision, because it was his life."
Nonetheless, father fondly remembers the occasion about two years ago when son mentioned he'd be interested in joining the company. The Bullington family has operated the Texas Tavern, Roanoke's legendary 10-stool eatery, 24 hours a day, every day except Christmas, since 1930.
Matt Bullington represents the fourth generation serving the restaurant's legendary chili along with the banter of short-order cooks. After working full time while he earned a degree from Roanoke College, he was named vice president and general manager of Texas Tavern Inc.
"He told me I'd have to learn every single facet of the business - from taking out the trash to dealing with disorderly customers - and I have to do it better than anybody else," Matt Bullington said.
And like the previous two generations, family ownership means "I have two relationships with him," James Bullington said. "Inside the building, it's business; outside, it's family.
"When you've had something in the family as long as we've done this, it's a big part of it - both the business and the family."
Perhaps the best-planned transition was at Grand Piano & Furniture Co., a regional home furnishings retailer. The death this month of the company's founder, George Cartledge Sr., probably had a bigger immediate impact on the community organizations he served than on the business of which he was chairman.
"We're all in pretty good shape," said his son, George Cartledge Jr., company president since 1972. "We all understand who we are and what we're doing," adding that his father began planning for transition of ownership 30 years ago.
To maintain a family business, "you have to make plans," especially for the financial impact of estate and inheritance taxes when the chief stockholder dies. Families often are forced to sell their companies simply to generate enough cash to pay estate taxes, he noted.
Absent such outside forces, the chief reason many family companies dissolve or are sold may be that siblings and cousins are unable to operate it together.
"We get along," Cartledge said of his son and nephew, who currently are senior vice presidents of Grand Piano. "We're fortunate that we enjoy working together."
LENGTH: Medium: 91 linesby CNB