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By TOM OBRZUT JR.; Times Leader Business Writer
Sunday, June 04, 1995     Page: 1G

Ill-planned successions can shatter a business owner’s dream of passing a
company to a family member, but two local companies have sidestepped the
problems and thrived.
   
More than 33 percent of all family-owned businesses don’t survive beyond
the first generation, say Mark Rubin and Fredda Herz-Brown of The Metropolitan
Group, a consulting firm that specializes in family owned and managed
businesses.
    And less than 10 percent make it to the third generation, they say.
Numerous pitfalls on the road to success contribute to these dismal numbers,
Rubin says, including a lack of transition planning, the absence of a
qualified family member to take over, mixing company and family business and
the lack of a conflict resolution plan.
   
Both Friedman’s Electric Supply Inc. of Exeter and Pen-Fern Oil Co. Inc. of
Dallas have survived beyond the first generation. Rob Friedman, a fourth
generation family member, runs Friedman’s. Jay May took over at Pen-Fern for
his father.
   
Friedman’s, which has eight stores in Northeastern Pennsylvania, was
founded in the early 1940s by Rob Friedman’s great-grandfather. It sells
lighting fixtures, electrical supplies, doorbells, lights and lamps.
   
Pen-Fern, which also owns Supreme Oil Co. of Hazleton, was purchased by
May’s father in 1944. May’s sister, Barbara McConlogue, runs Supreme. Pen-Fern
sells gasoline, heating oil, diesel fuel, kerosene and motor oils both
wholesale and retail. The company also owns six Pen-Mart convenience stores
and plans a seventh for Hazleton.
   
Businesses must plan to successfully transfer ownership to another
generation, Rubin says.
   
“Most family businesses don’t think about transition,” says Herz-Brown.
“It’s a long process. Most families wait until the last minute.”
   
May, 53, owner of Pen-Fern, already understands the need to plan. His son,
Eric, 23, and daughter, Heather, 22, one day could run the company. Heather,
who just graduated from Wilkes University, might pursue a degree in physical
therapy. Eric, meanwhile, is working towards a master’s degree in business
administration.
   
His children will have to decide whether they want to take over, he says.
   
“I certainly have not, for instance, encouraged or discouraged them,” May
says. “If they want it, that’s fine with me. If they don’t, I couldn’t retire
for quite a few more years and eventually look to sell it.”
   
Rubin says an owner who has control and involves other family members at an
early age has an edge when it comes to generational transition.
   
Rob Friedman, who took over from his father, Sidney, three years ago, began
working at his family’s stores when he was 13. He worked his way through the
organization and spent several years working in a different store than his
father. This, he says, was a smart idea.
   
“At a young age, you’re more stubborn,” he says. “We would have butted
heads over ways to change the business.”
   
Working at a location separate from his father gave Rob Freidman the
freedom he needed to develop the skills with which he could eventually lead
the company. “His father wasn’t over his shoulder,” Herz-Brown says. Sidney,
who still works, leaves all the decisions to Rob.
   
“The actual baton of authority and responsibility to take the business into
the future was passed,” Herz-Brown says.
   
Don’t force it
   
Owners force their children into the business to keep it in the family risk
spurring resentment and, ultimately, face a child who might not want the
business to succeed, Herz-Brown says.
   
Although members of the last two generations of Friedman’s family grew up
in the business, they weren’t forced to stay in it. “It’s opportunity without
obligation,” Rubin says.
   
“It’s important to enjoy the business,” Rob Friedman says. “I never felt
pressured. It makes getting involved a lot easier.”
   
May also said his father never pressured him about a potential transition.
In fact, May was away from the business for four years while he was in the
U.S. Navy. When he returned, his father included him in all business
decisions.
   
“I felt like I was an owner,” May says. “I might not have the final say
obviously, but my observations were taken and valued, for no other better
words, youthfulness and eagerness.”
   
During the 1980s, May’s father came to work for only two hours a day and
then only to sign checks. “He was the most expensive check writer in town,”
May says, jokingly. But his father maintained a presence that older customers
find comforting.
   
Bringing it home
   
Another way to ensure a successful transition involves leaving office
baggage at work — where it belongs, Rubin says. The Friedmans maintained a
rigid barrier between family and business, he says. The Friedmans, he said,
never discussed business at home. May tries to adhere to that policy also, but
he says it’s sometimes unavoidable.
   
“I try not to, but unfortunately, when I’m in a miserable mood my wife
knows,” he says.
   
To execute a smooth transition, Rubin and Herz-Brown say family members
should sit down and formulate a mission statement for the company, clarify job
responsibilities and develop a model for conflict resolution when there’s an
argument.
   
“Conflicts are inevitable,” Rubin says. “Before they happen, you must have
that process.”
   
Family
   
(Continued from Page 1G)
   
FAMILY, Page 3G