UB School of Management to Open Family Business Center

Release Date: July 29, 1999

BUFFALO, N.Y. -- Dig into the history of almost any Western New York business and chances are you'll find a family at its genesis.

The survival of family-owned businesses in Western New York and throughout the United States is a testament to their ability to overcome challenges unique to the family business, as well as problems that confront all businesses, says Marianne Sullivan, director of the Center for Entrepreneurial Leadership (CEL) in the University at Buffalo School of Management.

But while many family-owned businesses are able to survive for decades, many more fall by the wayside due to internal conflicts, unsound business strategy and a lack of succession planning.

"The family dynamic adds a dimension to business operation that can be difficult to manage," says Sullivan. "Compensation, hiring and firing, employee training and satisfaction, strategic planning -- all these functions become much more complex when family members are involved."

To help family-business owners and operators face these challenges, Sullivan and the School of Management will launch Oct. 4 a Family Business Center that will enroll up to 50 businesses each year. The cost of the nine-month program is $2,500 and includes enrollment of up to four members from each family business.

The center has signed six sponsors to support its activities: M&T Bank Trust Department, Hodgson Russ Andrews Woods & Goodyear LLP, Prudential Securities, Arthur Andersen, Mass Mutual Insurance and Business First.

The center will be modeled after those established by School of Management Dean Lewis Mandell while he was at Marquette University and the University of Connecticut.

Each family business that enrolls will be encouraged to have at least three people from the business participate in the program, including two generations of the family and one key manager. Succession planning -- the passing of the business from one generation of the family to the next --

and the development of business knowledge among family employees are chief concerns of most family businesses and will be a major focus of the center.

In the United States, family businesses account for an estimated 90 percent of the 15 million total enterprises, Mandell says. But only 30 percent make it to the second generation and just 8 percent survive for the grandchildren. Many potential successors simply lack the know-how required to continue the business and many others are forced to sell the business to pay hefty tax bills.

"Many family-business owners who are close to retirement have two goals in mind," says Mandell. "They want to keep the business intact and they want to keep the family intact. They may have several children with unequal interest or ability to run the business and they have to make tough decisions about who should run the business -- decisions that may seem unfair to some family members.

"Most family-business owners are expert at handling quantitative business decisions," he adds, "but they are unprepared to handle the psychological and emotional aspects involved with turning the reins over to other members of the family."

To help with these "softer" business decisions, the center will conduct meetings and seminars led by national and local experts in family-business operation and management. Members of the family not involved in the business also will be invited to attend sessions to help them understand and better cope with the pressures and responsibilities of business ownership.

According to Sullivan, the center already has generated interest locally. The decision to establish the center was based on requests from family-business owners who had completed the CEL's 10-month entrepreneurship program and wanted to continue their education with a program tailored to family businesses.

For more information about UB's Family Business Center, call 645-3000.

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