“What keeps you up at night about your business?” Lachlan Perks asked some of the Montana family business owners at the 2017 State Farm Family Business Day Awards Luncheon in Bozeman.
Interestingly, all of the answers had to do with employees, including Perks own answer to his own question.
Perks, now retired, was a co-owner of a family business in Illinois called Eclipse Inc., which employed some 600 people.
Paul Matovich of Columbus IGA said his concerns are about attracting and retaining good employees in a small town at a time when “everything is moving regionally.”
When asked “What keeps you up at night about your family?” Matovich said, “I sleep well in regard to my family.”
Tyler Erickson of American Bank also said his family situation is “solid” and give him no sleepless nights. His worries about the business have also to do with employees and the responsibility to them in an industry that is “changing all the time.”
Perks, who was one of four siblings involved in a business started by his father, and who had four of his own children involved in the family business, said about parents, “You are only as happy as your saddest child.”
With many of his employees having become “my best friends,” Perks said that he was always worried about being able to live up to his responsibility to them and their families. How to pass the business on to the next generation of Perks without harming the lives and livelihoods of all who worked for it was a big part of his worry.
“Driving your success by aligning your business’ strategy with the family vision,” was the theme of Perks presentation which was part of the celebration of family –owned businesses in Montana with the presentation of awards to some of the state’s most outstanding. The event is presented annually by the Montana State University Jake Jabs College of Business and Entrepreneurship.
A graduate of Montana State University, Perks said that he returned to the university as a guest speaker with a skewed perception about the kinds of businesses that would be represented. Since Montana is such a rural state, he thought that most of the businesses would be associated with farming and ranching — none were.
Perks did himself grow up on a ranch in Illinois, raising Hereford cattle. The ranch is still in the family, although they sold the other family business in 2014. They sold Eclipse Inc. – a manufacturer of commercial heaters that melt glass — not because they were planning to, but because they had an offer “we couldn’t walk away from”. At the time it sold they had manufacturing plants in six countries and sales in every industrialized country. It had grown from a $85 million business to $125 million during Perks ten years of leadership.
Partly because succession of a family business is so difficult, family businesses that last a hundred years is a rarity. Only three percent of family businesses last that long, said Perks, and he commended Missoula’s Office City, founded in 1916, for such a significant achievement. But even at three percent the longevity of family businesses is better than corporations. Only one of the companies that comprise the Dow Jones average is the same as a hundred years ago.
But all family businesses in the US are to be commended in the contribution they make to the country’s economy, said Perk. He cited statistics that show that 64 percent of all US domestic product comes from family owned businesses; family businesses employ 62 percent of all workers, and 78 percent of all new job creation is created by family-owned businesses.
And, family businesses are more resilient, he said. Studies suggest that after a recession family businesses are quicker to invest because they are a little freer to act and plan for the future.
Also, the return on investment is usually greater – 6.65 percent greater on average.
In every way family businesses out perform corporate companies, said Perks.
Succession from generation to generation is one of the most vulnerable times for family-owned businesses, and yet it is that 43 percent of them have no succession plan. “Making a plan is tough work, it is hard work, but get it done,” said Perks.
One of the single most important things a family business can do for continued success and growth, advised Perks, is to have a board of directors that draws on people from outside the family – and to pay them for their expertise. And, to bring in outside professionals when they are needed. Having perspective from outside is just as important as inside perspectives.
And, perhaps one of those times to bring in professionals is in the process of formulating a business strategy plan. Develop such a plan, said Perks, “and write it down.” “Communicate the strategy and its performance metric. Include how you are going to measure its success.”
Perks said his parents were big believers in education which was important for the continued success of the business. Also, he said, that while he always thought his father was a great manager, it wasn’t until his mother died in 1995 that he realized how instrumental she had been. “Mom was everywhere. She made my Dad great. Say ‘thanks Mom,’ to your mother.”
His father died in 2005, said Perks, and he did a great job in having the business set up financially for a successful succession.
Perks also advised that families should make a conscious effort of having time separate just for family. “We would have a barbecue every Sunday night,” he said, “and we just talked about business. We had no balance.”
The most stressful times among the family members was when the business wasn’t as profitable as it should have been, or when family members needed options but had none.
The business should have a mission statement, and in aligning a business with the family vision, it should include what the family values are. Perks said that they identified their family values as: integrity, honesty, trust, respect and joy. Joy was defined as seeing life as an adventure and stopping to enjoy it.
“Family values will begin your business philosophy” …and communicate those values to everyone including employees, shareholders, banker, etc.
Embrace this challenge,” Perks told the owners and employees of the family businesses, “because you are the best of the best in Montana.”
Other businesses who were recognized as outstanding businesses during the ceremony were Midland Claims Service, Inc., Billings; Visser Greenhouses, Manhattan;L. P. Anderson Point S Tire & Automotive Service, Billings; Bauer & Clausen Optometry, Billings; and Cowboy Cricket Farms, Bozeman.