You’ve done it. It required so much commitment — a business plan, a bank loan, endless hours roaming the aisles of industry trade shows to select the perfect product mix, and learning more than you ever wanted to know about such topics as point-of-sale displays and interior design. But you managed to turn that empty storefront into a thriving pool and spa operation.
Taking nothing and turning it into something is truly the American dream, and you may have established yourself as the first link in a chain that will leave your grandchildren sitting at the helm of a thriving multi-location business.
But before you get sidetracked with delusions of grandeur, remember that family squabbles might make the difference between a Kennedy-esque entrepreneurial dynasty and the whole family slinging insults at each other on “Dr. Phil.” Businesses and families don’t always mix as tiffs about drunken behavior at a family wedding and decades-old sibling rivalry can bleed right into business disputes. And if given the opportunity to fester, such sore spots may lead to the demise of your operation.
Follow this sage advice by industry professionals to deal with the inevitable disagreements that come along with running a family business.
Create the right culture Dennis Marunde’s grandfather, Ben Arvidson, started Arvidson Pools & Spas as a construction business that eventually became a multi-location pool and spa retailer in the Chicago area. From the get-go, he instituted a corporate culture that helped keep the company — and the family — on steady ground for nearly 60 years.
“We started out with a very strong ethic,” says Marunde, president of Arvidson, headquartered in Crystal Lake, Ill. “Everybody pitches in, everybody works. Honesty is very important.”
Marunde’s father and uncle jumped on board in the early days of the operation, making Dennis the third generation to oversee the business. Through those years, Marunde says, management made it clear their company would not succumb to the kinds of pitfalls to which some second- and third-generation owners/managers may fall prey.
By creating a family culture, and by extension a business culture, that squashes privilege-based spats before they start, the Marunde family has managed to thrive since 1958. “We don’t allow or tolerate a sense of privilege, because your last name is the family last name,” Marunde says. “Nobody gets to be very high and mighty about themselves.”
A part of that positive work ethic stems from another family rule: You must get your hands dirty at the lower end of the totem pole before enjoying the view from the top. This includes everything from cleaning floors and bathrooms to taking out the trash, stocking shelves, and testing pool water.
“No family member is exempt from needing to learn all aspects of the business from the ground up,” Marunde says.
Make it clear Any fan of “The Godfather” saga — essentially the story of a family business — knows that an awful lot of drama can ensue when a family member doesn’t feel that he’s been given enough responsibility or respect in the family business. That’s why having clearly defined duties and setting realistic job and salary expectations is a must.
“My family members in the business really have jobs just like anybody else, with clear expectations,” says Brian Quint, president of Seattle-based Aqua Quip. He is the third generation to run the family business.
In that vein, when Quint’s son-in-law, David Goldhammer, joined the company in what would eventually become the roll of inventory specialist, he was given a development plan. The document outlined all the skills he was expected to master within a two-year period, including familiarity with service department processes, knowledge of product purchasing and vendor relations. Quint’s vice president of finance acted as Goldhammer’s ‘coach’ and worked with him to develop skills and knowledge needed to fulfill those goals.
A 24-month plan isn’t a standard new-hire practice within the business. However, the strategy worked so well that Quint plans to use it down the road whenever he needs to fill a position on the leadership team.
“The 24-month plan gave us a really good basis for goal setting, goal review and to help identify other development opportunities,” he says.
The value of clearly defined business roles wasn’t lost on Marunde’s family business either. All employees at Arvidson have a clear job description and everyone in the family understands the payment structure as well.
“We are compensated according to our positions, not according to our family membership,” he says.
Open communication The fact is that, no matter how much a company owner prepares, plans and structures a business, it’s likely that a disagreement of some sort will arise between family members.
Most of the time, open communication provides the best solution for dealing with such conflict. At least that’s what Marunde and his brother, Doug Marunde, vice president of pool sales and construction, find when they disagree on a business issue.
“We make sure that we keep talking,” he says. “We don’t go to corners and decide that ‘my brother is my enemy.’”
Even after a heated debate, they manage to come to an agreement and not let their squabbles cause further tension.
Another company, Aqua Rec’s in Tacoma, Wash., benefits from institutionalized communication, says General Manager Chris Kovacs. His parents-in-law, Bruce and Vicky Shamp, founded the business and eventually sold it to their four children. Kovacs has found that keeping communications open and honest, in meetings and beyond, is key to keeping squabbles to a minimum.
The company uses regular company meetings as a key tool for bringing family issues to light. These arenas provide agrieved family members the opportunity to have their issues addressed right then and there. In addition to meeting regularly, Chris often will call a meeting when family members can’t agree on an issue.
“Sometimes that is difficult with brothers, as emotions can sometimes flare up,” he says.
What about the kids? Children who join the family business out of a sense of obligation but would much rather pursue other interests can end up making themselves and their parents miserable.
That’s why experts agree that accepting the children’s decisions regarding their placement in — or far, far away from — the business is the best way to keep everyone in the family happy.
“I want [my children] to look at this as a job, a career path, and not a trap,” Quint says. “I don’t want my kids running this business and then wish that they’d done something different.”
He recommends keeping the lines of communication open with your kids about their future in the business and having the willingness to confront tough conversations.
Because business founders can never know if the company will span multiple generations or stop with one, it’s best to plan for a variety of outcomes.
“Financial planners and attorneys are really worth their weight in gold when it comes to transitioning a business,” says Mike Geremia, president of Geremia Pools in Sacramento, Calif., whose grandfather started a concrete business that evolved into the current pool builder and landscape-design operation of today. “You’re much better off having [your succession options] planned out, that’s for sure. “It may not eliminate hurt feelings, but it certainly makes that process go smoother.”
He also recommends keeping succession plans out in the open and letting everyone in the family have a say. When people feel like their opinions matter, the likelihood of having an unhappy family, and an unhappy business, is significantly decreased, he says.
Arguments and occasional animosity come naturally to most families. But in a business situation, they can act like an undertow, slowly swirling beneath calm waters, ready to drag the whole operation to its death. But in most cases, simple measures such as open communication and clear job expectations are all it takes to keep family issues under control. By keeping the family happy and strong you’ll be able to help ensure the health of your business for generations to come.
Legal ease Before getting too deeply into a new family pool business, company owners will want to make sure that all of the legal and financial issues are taken care of to prevent family squabbles down the line. Here, Suzie Dingwall Williams, founding partner at Toronto-based Venture Law Associates, outlines the what, why and how of legal documents that every family business owner should have.
Voting Trust Agreement: This document appoints a person (usually the business founder) as a trustee. This individual has all the rights to vote or give the consent required from shareholders on particular company matters.
Shareholders Agreement/Operating Agreement: These documents act as a contract between the founder, other shareholders and spouses (whether or not they are also shareholders). They restrict the transfer of shares so that family members can’t attempt to sell out and force others to sell, and provide other safeguards.
In order to obtain documents that fit specifically to a company, it’s best to consult an attorney who works with family-owned businesses. Before going in, think about how the business should run, what role future generations should have in the business, your wishes for the business upon death, and the future role of spouses.
