Family and business can be a powerful combination, as evidenced by the seven successful strategists whose companies were chosen by Nevada Business Journal as Family Businesses of the Year.
When family overlaps with business, dynamics change on every level. “When things work well, tight alignment of family can be a powerful force,” said consultant Randy Rollinson, president of Chicago-based LBL Strategies. “And, when conflict arises between family members, it makes matters all the more complex because the fabric of the family gets interwoven with the fabric of the business.”
A recent study showed that the leadership of 34 percent of family-owned businesses will have changed hands in the next five years. Barbara Spector, editor in chief of Philadelphia-based Family Business magazine, said forward-thinking family business owners take great care to groom and mentor their successors.
Rollinson agreed, suggesting, “If you put your nephew in charge of the company’s finances, make sure he understands what a balance sheet is. If you are going to put family members with no marketing experience in charge of marketing, get them some help. Don’t assume because they are family members that they will be able to do a highly proficient job. They absolutely need support.” Still, trying to micro-manage children in a professional business setting is the kiss of death, Rollinson said .
Spector added that getting non-family involved in family businesses tends to make companies less insular. “The best family businesses get fresh blood on their teams,” she said.
ADVANCED INFORMATION SYSTEMS
Frank Yoder, president of Las Vegas-based Advanced Information Systems (AIS), started the software solutions company in 1987 at his house in Virginia Beach, Va. He set up AIS to handle contract programming for financial services companies that needed software developed. Yoder’s first employee was his brother Mike Yoder, who later became a partner at the firm. They moved to Las Vegas in 1994.
The company does business throughout the nation and in Europe, but by having one of the three principals involved on every project, Frank Yoder said AIS has been able to retain “that small-company, hands-on, ‘we care about your business as much as you do’ approach. We strive to have a small-company, caring attitude so our clients never feel like another line item in a journal.” The Yoders recruited Jeff Robinson to join AIS as CEO in 2003.
“So many firms brought up as small mom-and-pop companies either stagnate or die unless they have the ability to let go and bring someone in from the outside,” Frank Yoder said . “When you grow to a certain size, it takes the right type of leadership to take the company forward. A lot of companies never get to the next level because they can’t let someone else make these decisions.”
Frank calls himself optimistic and a risk-taker, while his brother is conservative and more of a realist. Two other brothers, John and James, have come in as programmers in the past. “During the process of growing from a one-man shop, we did not lose our focus,” noted Frank. “We have always treated co-workers as partners with utmost respect. Family comes first.”
AFFORDABLE CONCEPTS
Sammie Potter and his son Bob Potter started Affordable Concepts (ACI) in 1985. Brother Irl quickly joined his father and brother. ACI, now located in North Las Vegas, started by completing small remodeling jobs in homes. Today, ACI is a commercial general contractor specializing in small- to medium-size commercial construction projects, ranging from tenant improvements of a few thousand square feet, to free-standing buildings of 100,000 square feet or more.
Sammie Potter served as an officer in the company until his death in 1999. Bob Potter currently serves as president and CEO, with brother Irl serving as secretary of the corporation. Scott Weishiem, whom Bob raised since Scott was a small child, started working for the company soon after high school, and now is a principal of the company and also plays a key management role. The company recently invited Nelson Cumana to become a shareholder.
“As family members in business together, we have a common thread and everyone is looking at what is best for the company,” Bob Potter said. “We treat our team members like we would like to be treated ourselves.” Through hard work, dedication, commitment and long hours, ACI has enjoyed steady success and earned multiple awards and honors for projects. Other Potter family members, including Bob’s daughters, have been involved in the business over the years.
Many employees have been with the company since its inception, or shortly thereafter. ACI recognizes and rewards its employees for work performance and successful project completion, recognizing years of service to ACI. Bob Potter also generously reimburses employees for educational expenses. “Communication, commitment and common goals have contributed to our success. Whatever is best for the company turns out to be best for individuals,” he said .
HARRIS CONSULTING ENGINEERS
Harris Consulting Engineers has practiced professional mechanical and electrical engineering in the greater Las Vegas area since 1983, specializing in HVAC, plumbing and electrical systems designed for physical comfort, convenience, function and value.
Tom Harris, president and principal electrical engineer, and his brother, Randy, vice president and principal mechanical engineer, worked for their father, Floyd Harris Sr., in Mississippi. Tom and his father launched Harris Consulting Engineers in Las Vegas and were later joined by Randy.
“We don’t have a lot of challenges or struggles,” Tom Harris said when asked about the learning curve he faced working with his brother. “I have total confidence in my brother’s capabilities and the decisions he makes, and vice versa. We have done well. We have different circles of responsibility and tend not to overlap too much.”
Harris Consulting Engineers’ project team members have learned that their next job is dependent upon how they perform on their current job, so they work with fixed teams for projects, which allows staff to develop a lot of cohesion and camaraderie.
The brothers took a serious look at succession planning recently and – for the first time in 20 years – added three new principals to the firm who are not family members. The brothers invited long-time employees Kent Bell, Judy Bundorf and James Heal to become owners in the company. “For the long-term viability of the company, there was no question we have to bring people in who are going to be able to take my place and Randy’s place,” Tom said. “The promotions reward the outstanding accomplishments of these employees, while looking forward to their continued success and efforts towards the growth of the company. I hope to provide incentive to them and others to continue to do the work necessary to grow and expand the company.”
OPULENCE STUDIOS & THE PORTRAIT FACTORY
Las Vegas-based Opulence Studios, owned by brothers Tom Craig and Gary Zee, has grown into one of the largest, most successful commercial photography firms in the state over the last 20 years.
The brothers share common business goals and say being open and candid with each other and their team has contributed to their success. Craig said, “You never want to hurt anyone’s feelings, but as businesses mature you realize you can communicate and disagree without being hurtful.”
Craig and Zee socialize as families in their off hours, golfing together and camping together. To avoid letting their business dominate their lives, they have evolved a style in which they have a quick business “recap” right at the beginning of a family event, to get it over with before concentrating on family matters. “The business does not drive our family lives,” Craig said.
Besides offering benefits to employees, Craig and Zee offer staff members access to the studio on weekends for personal projects. They also provide liberal comp time. With Opulence enjoying steady success and a growing customer base, Craig and Zee wanted to bring a new option in quality portraiture to the area for individuals and families. This year, the brothers opened the Portrait Factory as a division of Opulence Studios, with long-time family friend Jennifer Lewis serving as general manager. The Portrait Factory is a new, all-digital portrait studio specializing in portraits that capture and enhance the subject’s personality through the use of a Hollywood-style technology called Virtual Backgrounds.
Craig and Zee enjoy combining family with business. Their mother, Marilyn, works at Opulence Studios with her sons, and Craig’s wife, Johanna, will soon join the Portrait Factory.
PARSON BROTHERS ROCK RETAINING WALLS
Parson Brothers Rock Retaining Walls is a rock-wall installer with offices in Henderson, Phoenix, Reno and Sacramento. Kevin and Bill Parsons started the business with their father, who retired in 1989. Kevin Parsons now runs the Henderson office, while his brother, Bill, heads up operations in Reno. Kevin and Bill have sons involved in the business, also in different offices. Bill’s son, Chris, had experience working for a lumber company before joining the family business. Kevin’s son, Paul, gained his expertise working for a large construction company in Seattle.
“When you are working toward a common goal, there is not a lot of conflict,” Kevin said of the family business. His advice to other business owners is to communicate and make sure everyone is on the same page with regard to “what you are doing with the famil, as well as the business, especially when personalities get involved.”
When asked about the downside of so many family members working for the company, Kevin Parsons simply laughed, “It’s tough when they go on vacation, but there’s a great deal of loyalty.” Kevin’s wife, Sherri, joined the company a few years ago. “In the past, she felt left out because I had compartmentalized my life, and she felt left out of the loop where the business was concerned,” he explained. Kevin said the business helps keep the family together.
The company has other families working for it, including Project Manager Lars Wright and his wife, Denis, the office manager. Sam and Donna Mather are installers in Sacramento. A truck driver and his son work for the company as well.
ROSE/GLENN GROUP
Valerie Glenn left a high-profile advertising job to join her father’s advertising agency in 1989. She wanted to move back to Reno, and Phil Rose was looking to grow his agency. She now offers an integrated package of marketing services at the Rose/Glenn Group, and represents a diverse list of clients, including medical, legal, convention services, accounting and banking.
Phil Rose is now semi-retired, and Glenn’s mother, Merle Rose, remains a part-time chief financial officer. Daughter, Kelly, has worked at the agency off-and-on since she was 12 years old.
Glenn and the Roses always had rules to prevent discussing business during family time and discourage bringing family issues into the office. She also learned from her father the value of diversity in clients. “We have always had a very diverse client list, not specializing in any one area that could make us overly vulnerable to situations in the marketplace. The diverse client list has not only broadened our horizons, it has also made our business a lot more fun.”
Glenn is proud to have maintained a family-oriented work environment. The firm has office dogs as mascots, and even has a nursery office set up with a crib and computer, so Moms or Dads can bring their babies into work when needed. “The nursery and the dogs are more ideas from my generation, but everything we do stems from a culture of being honest, fair and caring about people,” Glenn said.
Glenn has also launched Rose/Glenn University. Once a month, different department heads give very detailed presentations on what they do in their jobs. “It helps us work with clients and helps us cross-sell,” Glenn said. “It’s been enlightening and educational.”
SPORTS WEST ATHLETIC CLUB
Dee Dee Desiderio-Schula and her family started Sports West Athletic Club, which has been helping Northern Nevadans live healthier lifestyles since 1987. The 30,000-square-foot fitness facility just south of Reno’s busy downtown area is open 24 hours, 7 days a week and features a restaurant, a childcare center, indoor/outdoor athletic courts and an Olympic-sized swimming pool. Desiderio-Schula’s father, a real estate developer, saw the potential for a fitness center in 1986. Her brothers, who are accountants, have been involved behind the scenes, and her 15-year-old daughter, Jessica, works at the front desk and in the on-site childcare center. Desiderio-Schula’s mother, Lorrie, is her landlord.
Desiderio-Schula played an active role in her family’s businesses for many years before starting Sports West, having worked in commercial real estate and residential property management. She said the business acumen she gained outside of her family’s businesses make her a better businesswoman today. “I have been working since I was 14 years old,” she said. “I’ve worked retail, I’ve taught aerobics, and I had a dance company in college.
“My Mom always told us to be firm and be fair. I realize that in business today, I am firm, but I am also very fair. I enjoy seeing people grow and giving them the tools they need so they can excel,” she said.
The mother of four said being in business with family has helped her mature as an individual on many levels. “When you are new in business and working with family, it’s easier to take things personally,” she said. “As you mature, you learn business is business and it’s easier to separate the two.” Currently, Desiderio-Schula is expanding the club to open a spa facility, Sports West Spa, in 2005.
PRACTICAL TIPS FOR FAMILY BUSINESSES
Practical and emotional considerations aside, some family-owned businesses overlook financial implications and opportunities that arise when combining family with business, putting off until tomorrow what should be resolved today.
Robert Avery of Cornell University wrote that by the year 2005, virtually all closely-held and family-owned businesses will lose their primary owner to death or retirement. The effect of these succession events will be the largest intergenerational transfer of wealth in U.S. history. A 2003 study revealed that 19 percent of family business participants have not completed any estate planning other than writing a will.
Las Vegas-based estate planning attorney Jeffrey L. Burr, who is also a certified public accountant, pointed out that family members in business together need to openly communicate different business succession scenarios to avoid bickering and fighting. “Families can be torn apart by litigation if they don’t communicate and have a well-thought-out plan in place for business succession,” Burr said.
In fact, inadequate estate planning and failure to properly provide for the transition to the next generation, coupled with the lack of funds to pay estate taxes, were among the leading causes for the failure of family-owned businesses, according to a University of Connecticut study.
Beth Walker, a financial integrator with Wealth Management Group, which has offices in Las Vegas and Reno, said a formal business valuation is critical for family-owned businesses. “If only the husband, sibling or father knows the value of the business – or has their own unique way of doing a calculation to arrive at a figure in their mind only – other people involved in the business can suffer from significant disappointment in terms of expectations and pocketbook. A disinterested third party who can provide an unemotional way to determine the value of the company – based on facts, not conjecture – is the only fair way to handle this important aspect of owning a business.”
Many family-owned businesses miss out on benefits, such as lucrative tax-savings strategies, said John Chartier, a Las Vegas-based CPA. “One planning opportunity saves substantial self-employment tax by properly structuring a business as an S Corporation instead of as a sole proprietorship, partnership or limited liability company,” he explained. “Another opportunity reduces overall income tax by spreading income to different family members in lower income tax brackets. In some cases, portions of income can escape income tax altogether.”
Helpful resources for family-owned businesses can be found at the Family Firm Institute (ffi.org) and Family Business Magazine (familybusinessmagazine.com).
