Family Business: Preparing for Succession
"I know the odds are against us, but we're going to give it a shot," says Tony Stein, codirector of Camp Echo Lake, a $2-million family-owned summer camp in Warrensburg, N.Y. Fewer than 10% of all family businesses make it to the third generation, but Camp Echo Lake, founded by Stein's grandparents, has a better chance of survival than most.
Stein's father, Morry, didn't have a formal succession plan, but he was determined to prepare his three sons for ownership of his business. "Ten years ago we started having monthly or bimonthly family-business meetings," says Tony. "None of us were in the business then, but Dad felt it was important to keep us abreast of what was going on." As the family discussed everything from capital projects and tuition increases to estate planning and insurance, each son's role emerged naturally. The oldest, Eric, was the outside adviser. The youngest, George, was impassioned by sales, and Tony, the Wharton M.B.A. with four years of outside experience, gravitated toward the administrative and financial duties. Morry Stein prefaced many of those meetings with the grim scenario, "If I ever die in a plane crash, here are the steps you need to take."
Eerily, that's exactly what happened in November 1994. "When my dad died, I knew exactly what to do," says Tony. "He had been training us for 10 years; those meetings were like fire drills." So far, the transition has been smooth, and the brothers, who are codirectors along with their mother, are now working out a plan to buy her shares -- a succession tactic that was discussed at Morry Stein's meetings.* * *
DONNA FENN | Inc.com Contributing Editor
Donna Fenn is the author of Upstarts! How GenY Entrepreneurs Are Rocking the World of Business and 8 Ways You Can Profit From Their Success, an exploration of the ways Gen Y is changing the entrepreneurial landscape.