My experiences working in my family’s manufacturing and distribution business for 17 years shaped my early life, and they continue to do so today. I was there at the conception of the company; I helped choose the company name and the colors of the packaging. When I was 15, I worked in the packaging department after school and on weekends (7 days a week for free). When I was 16, I received a raise to one dollar a day! This put $7.00 worth of gas in my VW van, enough for all week. One day, after a 24-hour period with no sleep (when we rushed out the largest order ever in order to make a deadline), I asked my father, “Why are we working so hard?” The answer was classic: “One day this will all be yours.” It worked! There were no complaints from my brother or me, and the entire family buckled down, with the same goal of building the business to provide for our family and our future.
Our company rode the fast-growing trend of health and nutrition products in the 1970s and 1980s. We had tremendous growth, the management of which was an ever-present problem, albeit a great problem to have. One year, our sales increased 1,600%! Imagine the constant strain on cash. In the early 1980s, we received a buyout offer of over one million dollars. We really did not consider it for more than a few minutes. Our growth had no end in sight. Why sell out now? The members of our family made a very nice living. Let us keep this for our children and grandchildren, we thought. At our peak, we employed more than 65 people. I ran most of the sales force; my brother ran the manufacturing, packaging, and warehouse operations; and our father oversaw the company as a whole. Our mother worked off and on as needed. We each had our areas of expertise, yet when our roles overlapped, there could be some disagreement. For example, my father came from sales, so our roles overlapped often. My father had final decision-making authority, yet he listened to our input and desired consensus. After a few years, my brother and I became partners. We split equally one-third of the company; our parents had two-thirds.
In the late 1980s, we lost our largest customer, which had accounted for 30% of our sales. After a few rounds of pay cuts, and some serious belt tightening and hard work, we built the company back up to where it was previously. Eventually, the decision was made by all the family members to sell the firm. We all went our separate ways after working together for almost 20 years.
In many respects, being at the family business was the best of times. I miss the lightning-quick strategic decision making and implementation and the always-present entrepreneurial opportunities and risks. Along the way, there were long workdays, few vacations, discussions of business during holidays, some arguments, hurts, and conflicts of interest. The experience fueled my interest in studying the practice of family business, and in particular trying to discover what successful family firms do differently from others. Unfortunately, our family was not aware of family business consultants at the time. Looking back on the situation, I am left wondering whether we were as good as we thought we were or whether our success was simply due to being in the right place at the right time and riding the upward momentum of a large trend. Some key strategic decisions were eventful: Our decision to diversify away from our core competencies into manufacturing took a massive investment in raw materials and expensive increases in inventory, thus hurting the cash flow. The decision not to invest in other areas, such as real estate, when business was going exceptionally well could now be seen as shortsighted.
Our family business would have benefited from the advice, principles, and pearls of wisdom from research scholars and the successful family businesses presented in this book. It is my desire for this book to help other families in business. Families in business together need to know that issues will arise. This book has tips and techniques to manage through them, better understand their cause, and ways to prevent some issues from occurring.
Keanon Alderson
October 19, 2010