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Family Affairs – Succession is a Sticky Issue for Many Family Firms

THE BUFFALO NEWS – Monday, August 9, 1999 – Page B6

Nurturing a family business can sometimes be as arduous as trying to grow a flowering crab apple tree in a shady yard.

The owner of Woodstream Nurseries, Inc. in Clarence Center is not oblivious to the forces that can sabotage family-owned enterprises. But Dick Page is convinced that he and his likely successors are taking early steps to avoid the kind of problems that cause two thirds of family businesses to falter before they make it to the second generation.

As Woodstream Nurseries celebrates its 30th year, it will be among the first companies to enrol in a new Family Business Center that will debut this fall at the University at Buffalo School of Management.

The program is modelled after centers that were established in Connecticut and Wisconsin by UB School of Management Dean Lewis Mandell and will include some unique components.

For example, a psychologist will outline strategies for improving family communication. Out-of-state entrepreneurs will tell horror stories about how family tensions undermined their businesses. Overnight retreats will give participants ample time to probe the complexities of running family enterprises.

Page, who has been active in UB's Center for Entrepreneurial Leadership since 1991, thinks the program will offer sorely-needed assistance to entrepreneurs who often feel isolated.

"When you own a small business, it sometimes feels like you're on an island all alone, fighting the forces of the world," he said.

When the landscape designer decided to leave Menne Nursery and set up his own business in 1969, Page never thought Woodstream would blossom into a family business.

"I did everything I could to convince my two kids to try something else," he chuckled.

It worked with his daughter, Lisa, who became a school teacher. But his son, Eric E. Page was bitten by the landscaping bug when he was eight and was riding tractors with his dad. By age 14, he was washing the nursery's fleet of trucks and he ultimately majored in landscape design at Alfred State, his father's alma mater.

Now 31, Eric Page is vice president of Woodstream Nurseries and heads the design and building division. He oversees projects that include landscaped and lighted driveways, patios, gazebos and pool houses.

"My father is from the old school, while I'm from the new school. But we've used these differences to our advantage," he said. "He's the best teacher I could ever have."

There's another family dynamic to consider. Randy Wdowka, a long-time foreman at Woodstream, married Lisa Page three years ago. The president's son-in-law now oversees the physical plant, a sprawling 18-acre nursery on Wolcott Road that includes a retail store and a wholesale division.

"Randy is a key player in the business," said the elder Page. "He tends to be more calculating than Eric or me. He can sit down and evaluate all options, rather than making decisions from the gut."

Dick Page believes that clearly delineating the roles of each family member has helped to keep the business on course in an era of heightened competition.

The 58-year-old president also relies heavily on guidance from people outside the family circle. Ten employees in key positions have worked with Woodstream for more than a decade and the five-person board of directors includes three non-family members.

A succession plan will be finalized in the coming months as Woodstream officials work with experts in UB's Family Business Center.

This brand of strategic planning is becoming more common among family-owned companies, according to a Toronto business adviser who recently published a survey on trends in family businesses.

Aron Pervin of Pervin & Co. Inc. commissioned a survey firm to do lengthy interviews with managers at 450 family businesses across Canada.

The survey spawned a 40-page study that concluded that a growing number of these companies are using formal governance systems and that there is a shift away from the unilateral control by an autocratic leader to a more inclusive management structure. Family meetings -structured discussions where problems are hashed out-are also becoming more common.

"Lack of communication and lack of planning are among the biggest impediments to the success of family businesses," said Pervin, who has advised more than 400 companies over 25 years. "Too often, they rely on telepathy to guide their businesses."

Marianne Sullivan. director of UB's Center for Entrepreneurial Leadership. agreed that poor communication is one of the most common causes of failure among family businesses, along with the absence of succession plans.

She said the new Family Business Center will benefit from the insights of local bankers, financial and tax experts and other professionals from six sponsoring organizations. The nine-month program will cost $2,500 and each business will be allowed to enrol up to four people.

"We would like to see companies enrol at least one non-family member. These key managers are important to the business and they frequently feel like they're all by themselves," Ms. Sullivan said.

UB isn't the only local institution that offers assistance to family businesses. Alfred University operates the Center for Family Business and Entrepreneurship, a program that has benefited in recent years from a number of large contributions and foundation grants. Meanwhile, Canisius College's Center for Entrepreneurship has also sponsored programs for family-owned companies.

Dick Page said it's often tempting to try to expand the company to accommodate the involvement of relatives.

"It's easy to start thinking that bigger is better, but that's not always the case," said Page, whose company employs about 45 people at peak season and a dozen workers the rest of the year.

It's also easy to drag business matters into the home.

That's where Dick Page's wife, Karen, intervenes. Although she's a good "sounding board" for nursery managers, she hasn't been actively involved in the business for years and she's not shy about discouraging shop talk at the dinner table.

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