Nina Jones has no problem keeping up with the Joneses. As manager of Ellis D. Jones & Sons Funeral Directors in Durham, North Carolina, she has a hand in just about everything related to the front and back office, from keeping track of the financial books to helping families plan funeral arrangements and related matters for their loved ones. Nina, who recently turned 36, works alongside Michael G. Jones Sr., the company’s president, and Nellie Taylor Jones, vice president. Michael and Nellie are also Nina’s parents.
“My father used to meet with the families,†recalls Nina. “They would walk in, bypass me, and ask, ‘Where’s Mr. Jones?’ They weren’t looking to make arrangements with a 22-year-old young woman.†But that’s just who they got. Nina had originally planned to pursue a career in counseling. However, helping operate the business founded in 1935 by her great-grandfather, Nina says she’s grown to love her career and that she’s proud to preserve its legacy. She also feels that the company has the stamina to go further.
Ranging in size from traditional small businesses to a third of the top 500 companies in the nation, about 90% of all U.S. businesses are family-owned or -controlled, according to the Small Business Administration. For a young person currently at or planning to take the helm of a family-owned business, it is important to know that it takes much more than a transition of power to guarantee its success.
IN THE MINORITY
To their credit, Jones & Sons and a few companies on the be 100s are anomalous. The SBA reports that less than one-third of family businesses survive the transition from first- to second-generation ownership. Of those that do, about half do not survive the transition from second- to third-generation ownership.
“Less than 10% of family-owned businesses get to the third generation,†notes Michael, Nina’s father. “I was fortunate.†Michael grew up around his grandfather’s business and enjoyed it from the start. “As teenagers, my brother and I ran an ambulance service, picked up bodies, put up tents, and worked funerals,†the 62-year-old recalls. Of course, he also remembers the challenges. “There are always bumps in the road when you work with family,†he concedes, alluding to the disagreement he had with his father that led to his leaving Jones & Sons for 12 years.
Ultimately, the two reconciled, and Michael returned to the business and purchased it wholly from his father in 1991. Today, it’s an immediate-family affair that sometimes includes his older son, Michael G. Jones II, helping out as a funeral attendant. With his younger son, Marcus, uninterested in working for the business, Nina is his only child with significant involvement. “I’m not going to say it’s perfect–we do fuss and fight,†Michael notes. “But in the end we work it out.†The Joneses, along with four full-time nonfamily employees, manage a thriving small business. But other companies aren’t as lucky.
A FAMILY AFFAIR
The main reasons family-owned small businesses fail are simple:
– They don’t plan for the future. “Issues that arise are often avoided until it’s too late,†says Dennis Jaffe, Ph.D., a family business adviser who is also professor of organizational systems and psychology at Saybrook University in San Francisco.
– Family considerations overrule business considerations. “They do things for family reasons and based on family traditions rather than on business reasons. Those two issues show up over and over again,†says Jaffe, who is also the author of Stewardship in Your Family Enterprise: Developing Responsible Family Leadership Across Generations
(Pioneer Imprints; $19).One way to counter the first of these two problem areas is to prepare the next generation–the potential successors–for the future. Jaffe recommends starting the moment they begin working in the business, if not sooner. But going from dinner talks to talking business can be a tricky transition. Michael agrees. “Trying to listen to Nina as an adult, as an employee, and not as the child I’ve raised–that’s always a hard transition,†he admits. “And I had the same experience with my father. We had bumpy roads.â€
Having a parent as a boss is not the same thing as having a third party as a boss, asserts Neil Raphel, founding partner of the full-service St. Johnsbury, Vermont-based Raphel Marketing, as well as co-author of several business books, including Business Success in Tough Times (Raphel Publishing; $17.95) and The Complete Idiot’s Guide to a Successful Family Business (Alpha; $18.95). Raphel says those involved in a family-operated venture must “act like it’s a business.â€
From how the monies are managed to dealing with issues of hiring, firing, and compensation, the consensus is to keep business concerns separate from family issues. Guidelines for responsibilities, expectations, and legal requirements should be in writing, because blurring or disregarding the boundaries can hinder professional and personal relationships and jeopardize the business. “You have to keep the distinction between your family and your business,†Raphel asserts. “Your family is always your family, but the business, you should treat as such.â€
A YOUNGER PERSPECTIVE
Nepotism and commingling finances, among other indiscretions, are what family-owned small businesses need to ward against. Just as detrimental is allowing the business to stagnate. The best defense is the injection of someone who doesn’t just have new ideas but also has the willingness and power to implement them. This can be someone from within the family or from outside who’s brought in.
For Jones & Sons, the ideas and implementation may have come from Nina but embracing them has been a companywide effort. Michael credits Nina with bringing technology to the company in 2000. For example, gone is the showroom full of caskets, replaced with a virtual one. Today, clients choose from the company’s entire warehouse selection on a 37-inch monitor, which saves time and makes the process more comfortable. The entire staff had to adjust and learn how to use the technology, including Michael, but he says they all took it in stride. “The industry itself is changing,†he acknowledges. So far, Jones & Sons is keeping up.
Over the years, Nina, who’s worked in the company for 13 years, also orchestrated plans to upgrade the staff from suits to tuxedos during funeral services, to update the logo, and to increase Jones & Son’s branding efforts. “We have increased revenues because of it,†she notes.
Open communication is paramount for any business, and that applies to family and nonfamily members. “We’ve seen surveys where the most important thing an employee wants is being in on things. It’s even more important than salary,†insists Raphel, who is also a principal of Brigantine Media, a publishing house in St. Johnsbury that focuses on business books. Being kept in the loop is important for nonfamily employees and family members, he says. “You just can’t assume, because you have your son or daughter in your business, that they know what’s going on.â€
THE NEXT GENERATION
“I hope my wife and I ride off into the sunset,†says Michael. He and Nellie, who is 60, are approaching retirement age, so succession planning is a growing topic of discussion between them and their daughter, as it should be for any family business looking to thrive for generations to come.
Raphel urges entrepreneurs to put together a succession plan sooner rather than later. It’s not that the successor has to take control immediately, but all involved need to sit down, discuss how ownership will be transferred, and agree to it, he says.
Nina admits to feeling some pressure because of her parents’ eventual exit from the business, but she says it motivates her. “I’m well aware of the history and legacy,†she says. “The younger generation must realize that the previous generation worked hard to grow their clientele. As a new generation, I have to continue to do this, not just with my parents’ name but with my name, with me as part of this business. I have to make it my own.â€
And the guidance of her father, grandfather, and great-grandfather is helping usher Nina into a role of leadership and of bringing long-term goals to fruition. They include expanding into a larger facility as well as to areas beyond the local community. As her duties increase and she continues helping her father and the staff implement new business ideas, one thing that may need updating is the company’s moniker. “Granddaddy was a visionary, but he just didn’t see that coming,†says Michael, with a laugh. “It’s always been Jones & Sons. Maybe one day we’ll change it.â€