The Hidden Economy
Look through today’s newspaper, news blogs and tweets, and you’ll see plenty about publicly traded companies, public figures and economic reports. You’ll also find these types of stories—with added perspective—on our website, TCBmag.com, and in our twice-weekly e-newsletter, Briefcase.
We provide such coverage knowing it’s of interest to a large percentage of readers, based on those that click on a headline and then spend so many minutes on a given story. We also know that they only scratch the surface of what really goes on in the business world every day. That’s one reason we’re so pleased to produce the range of stories you find in every issue of this magazine. Among them is this month’s Minnesota Family Business Awards coverage, see “2014 Minnesota Family Bussiness Awards“.
In general, family businesses don’t get a lot of media coverage because they’re so private. Yet they comprise more of our economy than do the publicly traded businesses the media tends to over-cover. An estimated 90 percent of U.S. businesses are family-owned, including the largest of them all: Walmart. They represent 49 percent of U.S. Gross Domestic Product, employ more than 60 percent of the workforce and account for 78 percent of all new jobs created.
About three and a half years ago, I met Tom Hubler to discuss how we might partner on this subject. Tom runs Hubler for Family Business and had been leading a family business awards process for four years; it was the type of content that I wanted to add to TCB’s offerings, given the stats mentioned above.
We’re now presenting our fourth set of awards working with Tom, and each time we’ve been able to produce stories and videos that give our audience a more personal view of what it takes to lead a business across all constituencies for several years, if not decades. The acceptance speeches at these events are refreshingly heartfelt, combining business smarts with moral fortitude, while keeping family and friends front and center.
One of the best speeches was by Kari Rihm, CEO of Rihm Kenworth, at last year’s Family Business Awards. Five years ago, it looked as though she and her husband, John, would eventually sell off the family business that John’s grandfather had started in 1932. But John died suddenly, and Kari found herself the sole owner of the company, with a decision to make: Sell it or keep it. This video of her acceptance speech provides not only an excellent window into why and how she kept it, but why this fourth-generation family business is still going strong today (you can watch it by going online to bit.ly/110oIFo).
Kari’s story also is indicative of what we find with many family businesses in Minnesota—they make it beyond the second generation. We have several now in their fourth—a bit of an anomaly given that nationally only 30 percent of family businesses successfully transition to the next generation; only 12 percent make it to the third generation and 3 percent to the fourth generation.
Every year, Tom and a panel of other judges carefully review nominations provided by our readers. We narrow the list down and then scrutinize – and sometimes debate – the qualifications of each to identify five honorees and five finalists. Our coverage of this year’s honorees demonstrates once again how family values, dynamics, idiosyncrasies and traditions can help a business succeed, and how the emotional side of family relationships can help counter the sometimes cold, hard realities faced when making critically important business decisions.
We also examine how these businesses have prepared for, or are preparing for the next generation for leadership. What roles do various family members play in the business? What values do these companies seek to impart to the family members, and how are those values expressed within their communities?
Here are a few outtakes from the conversations we had with this year’s honorees.
“There are lots of other things I could’ve had a really good time doing with my life, like being a surety salesman or something, where they golf four days a week with their clients . . . and they get paid pretty well, too. But for whatever reason, I’m good at leading this company and I didn’t know that until I was doing it. I now have basically a sacred responsibility to keep this going because there are 180 families depending on us making the right decisions, and if we don’t, they all have to either travel to new work or relocate or their lifestyle goes. So it’s 180 folks that keep me going.” —Brian Mathiowetz, co-owner and CEO of fourth-generation Mathiowetz Construction Co.
“We’ve had a lot of inquiries over the years [to sell the company] and we don’t even seriously consider it. It doesn’t lend itself to success when it becomes corporate-owned, as it’s a hands-on business. And I think we owe it to our employees, our customers and our suppliers, as well as to ourselves, to provide the continuity that we’ve been able to provide.” –Gordie Bailey, chairman of fourth-generation Bailey Nurseries
“Something my grandfather used to always pride himself on in the early days of the business was if you had an employee and they were a good person but maybe not working out in that particular role that they were in, he would work really hard to see what else they could do here at the company. We continue to do that today, and you’ll find a lot of employees who’ve been here for 30, 40, some even 50 years.” –Jennifer Dalquist, family member and director of sales and marketing at third-generation Nordic Ware (Northland Aluminum Products)
“The biggest surprise is how well we are doing today, and that my children are able to carry on and they are very interested in seeing the business grow. You can’t imagine [in the beginning] that it would turn out like this: It’s a wonderful happening. Our family works well together, we all realize that we have different talents that we can put into the business, and that we are all needed.” –Dorothy Dalquist, who co-founded Nordic Ware in 1946
I hope you enjoy the profiles of this year’s honorees and can join us for the awards event the evening of Nov. 12, where you can hear firsthand from these otherwise relatively hidden leaders of our economy.