Institute for Family Business helps businesses make it to the next generation


STOCKTON — Many business owners spend a lifetime building a company with the hope of passing it on to the next generation. But how can you be sure your hard work will live on for decades to come?

Cathy Cardoza-Connor wondered how to keep growing the real estate investment business her father started.

“There’s no handbook or manual about how to run a family business, and I inherited an old school, traditional business and decided I needed to see if I was missing anything,” Cardoza-Connor said.

Cardoza-Connor went to the Institute for Family Business at the University of the Pacific for help.

“We as a family went to the drawing board and formulated a plan,” said Cardoza-Connor, who was glad she’d been proactive. “It blows my mind when family businesses don’t have a succession plan that builds a rapport within the family before an emergency strikes.”

The Institute for Family Business (IFB) was founded to fill a void in Northern California where no one was helping family businesses survive, grow and pass on to the next generation.

“There were no resources for them,” said Peter Johnson, director of the University of the Pacific Institute for Family Business. “The institute has programs to educate family businesses in a number of important ways, perhaps the most crucial being succession.”

He said one-third of businesses are passed from the first generation to the second; from the second to the third generation about 13-14 percent make the move; and from the third to fourth generation only 3 percent successfully survive succession.

Succession within the family usually doesn’t receive much attention. It is often assumed that decisions will be made among family members, and the company will move on, Johnson said. When problems occur, they usually stem the family members “not recognizing themselves as a family business because of the perception that family businesses are small,” Johnson said. “In fact, the majority of the family businesses we deal with are multi-million-dollar operations.”

The Institute for Family Business is a resource center to help family and privately held companies meet their challenges. The institute’s programs bring together owners, managers, and family members in forums that permit them to work through family and business transitions, and develop and put in place a strategic vision for the business and family.

“Parents will say the kids aren’t dedicated or the kids will feel their parents have been dismissive of their ideas, for example. Many will say, ‘We don’t have [those] problems’”, Johnson said. “But in our seminars, conferences, workshops and forums, family members realize they have issues, and that they’re not unique, that others have the same issues.”

A cross-section of family businesses use the IFB’s services: car dealers, wineries, hotels, food manufacturers, farmers, real estate firms and retail.

The institute designs discussion of topics for members, brings in top quality speakers, makes available an extensive reference library and provides access to leading professional service providers along with the combined resources of the universities in the California Family Business Program Association. They include University of the Pacific, University of San Francisco, CSU Fresno, CSU Fullerton, University of San Diego and San Diego State University.

“Families usually don’t discuss challenging issues and Dad traditionally doesn’t talk about transition planning and having to pick a successor. These are difficult conversations that have to take place if the business is to transition efficiently,” Johnson said. “The question the family must ask is, ‘Are we developing the next generation of leadership?’”

Families must create best management practices for their business and then they must use them and put policies into place before they’re needed, Johnson said. Whatever the issue, Johnson says communication is key.

To help families understand and work through their challenges, five two to three-hour programs are held annually with national and regional experts to share insights on business history and challenges. The wide range of topics covered include effective communication in the family business, estate and succession planning, sibling rivalry and separating family and business responsibility.

Affinity groups made up of six to eight IFB members meet monthly to confidentially discuss issues most critical to them. The topics are: The next generation and the senior generation (in preparation).

“The idea is to allow members to share similar challenges that others in the group may be able to help resolve through their own experiences,” Johnson said.

An advisory board makes sure the program is moving in the right direction by offering input on the programs, topics, speakers and new and inventive ideas.

“The IFB partners perform a crucial role,” Johnson said. “They provide sponsorship dollars, expertise, potential program members and other resources needed to assure the success of the program. Also, the partner ‘subsidy’ reduces the cost of the program for our Family Business Members.”

The partners include the law firm Neumilller and Beardslee, accounting firm Moss-Adams, family business consultant Evolve Partner Group, insurance firm Richard R. Paulsen  of New York Life, and Exchange Bank.

Cardoza-Connor said it’s best to use the IFB before your company’s succession has hit the rocks.

“The IFB is often seen as a place to go when your business is in crisis mode, and I wanted to be proactive and learn how to be successful in my father’s business and keep family members involved.”



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