By ANGUS LOTEN
"Take Two" is an ongoing series about first-time business owners over 50 by Angus Loten, a small-business reporter for the Wall Street Journal.
Carol Mintz never> thought she'd own a business let alone share the responsibilities of running one with her family. At 64, after a 30-year career in media marketing and advertising, she was ready for a comfortable retirement, spending more time in her garden. But then the recession struck, and though Mintz was left unscathed, her twin daughters weren't. Laid off and looking for work, her daughters discovered a local boutique that sold second-hand children's clothing. "They kept telling me about this great store that had so much potential but needed a little TLC," says Mintz. By early 2010, the Mintz women were in business.
An estimated 90% of businesses in the U.S. are family-owned or -controlled, from corner stores to Fortune 500 companies, according to the Small Business Administration. While the recession has taken its toll on many new ventures, it's also prompting many families to band together for economic survival. And a growing number of the businesses they're creating are being led by a matriarch, observers say.
According to MassMutual's latest American Family Business Survey, the number of female CEOs or presidents at family-run firms more than doubled between 2002 and 2008, to about one quarter of all family businesses. "We've seen a lot more women leaving the corporate world to go into business for themselves and many of them are parents," says Isisara Bey, vice president of programming and education at Count Me In, a New York-based non-profit group that provides coaching to women business owners.
But while family businesses offer advantages such as greater trust when parents or siblings are business partners there's also potential pitfalls, says Wayne Rivers of the Family Business Institute, a Raleigh, N.C., consulting group. In particular succession planning can often lead to serious tensions between family members. Only a third of family-run businesses are successfully passed along to the next generation, according to the Boston-based Family Firm Institute. Another stressful issue that's often the most overlooked, says Rivers: "How's mom going to get paid back?"
In Mintz's case, she bought her family's store, a franchise in Children's Orchard of Manhattan Beach, Calif., with $100,000 in cash from her retirement savings. She gave herself a 50% stake and her daughters, 40-year-olds Carrie Rosenblum and Cindy Kehagiaras, each 25%. "She's the CEO," Rosenblum says of her mom. And while they have no formal payback plan in place, Mintz says she hopes to recoup her initial investment through her salary as the business grows.
So far, they're on a good track: In the first year alone, revenue at the store was up by more than 70% and is on pace to grow 80% this year, Mintz says. The store's customer count has also grown by more than 90%. As a worst-case scenario, Mintz, who spent over a month researching and negotiating before buying the franchise ("I'm not going to invest in something and lose my retirement") can always sell the business to get back her investment, though that's the furthest thing from her mind, she adds.
For family enterprises, another major source of friction is on-the-job performance, Rivers says. "More so than with co-workers, what happens between siblings is the expectation that they're going to be putting in the exact same hours," he says. That gets complicated, he adds, when family members have different skills that require more or less of a commitment, and can lead to squabbling that can bring out long-buried issues, "like the time you punched me in the nose when I was seven," says Rivers.
Indeed, a quarter of the all family-run businesses surveyed recently by PriceWaterhouseCoopers say there have been arguments over the competence of a family member employee and two-thirds of those companies have no formal strategy for dealing with the disputes.
But there are ways to minimize the fighting, says Mintz and her two daughters. "There are times when one or the other feels they're working harder than every else," Rosenblum says. But they now have a regular weekly meeting, where plans and expectations are laid out for the weeks and months ahead.
Making sure each member has clearly defined roles also helps, they say. For her part, Mintz works about 40 hours a week at the store and keeps a close eye on the numbers. Kehagiaras uses her past fashion-industry experience to design merchandise and window displays. Rosenblum, a former regional marketing manager for the Wild Oats Market grocery store chain, oversees marketing and staff. The daughters each put in about 30 hours a week at the shop. "All of us were in the corporate world and we know how important structure is," says Rosenblum.
And with her daughters taking the morning shift, Mintz says she still gets plenty of time for her garden.