Worcester Business Journal

14 Worcester Business Journal | May 14, 2018 | wbjournal.com BY GRANT WELKER Worcester Business Journal News Editor Family businesses have high failure rates, unless members can learn and adjust PHOTO/EDD COTE F O C U S S U C C E S S I O N P L A N N I N G From to GENERATION GENERATION S oon aer Jessica Bettencourt took over as the third gener- ation owner of the hardware and outdoor equipment retailer Klem's in Spencer, she decided she'd make a hard decision her father couldn't bring himself to do. Klem's opened in 1946 as a tractor repair store, but tractors had long since stopped being a significant moneymaker for the business. So Bettencourt, who took over in 2011, pulled out. "at was how my grandfather started the company," Bettencourt said of John Klem, who started the shop in Hard- wick. Bettencourt went through the company's financials, however, and hired a consultant and kept coming back to the same conclusion. "Every option we thought we could do, it led back to that we really had to close this part of the business," she said. "It was definitely been the right thing to do." Klem's can count itself in the minority of businesses reaching a third genera- tion, an achievement family-business experts say is increasingly difficult, requiring tough decisions, outside perspective, and an ability to avoid pitfalls like intra-family squabbles over a company's future or its riches. "Businesses don't run on democra- cies," said Jeffrey Davis, the chairman and founder of Mage LLC, a fami- ly-business consulting group in Newton, explaining the authority a family-busi- ness leader needs to make important and oen difficult decisions. "ey run on benevolent dictator- ships," Davis said. Changing with the times Family businesses likely don't see themselves as dictatorships, but to be multi-generational businesses, they've survived by adapting and looking ahead instead of how things have been done in previous generations. Red Apple Farm in Phillipston has made it into its third generation and its 10th decade because its taken on major changes. Albert Rose, who went by his middle name, Spaulding, started the farm in 1929, leaving it to his son, Bill, in 1981. At that point, 95 percent of sales were wholesale. But Bill Rose saw his small operation's future in retail – and now the business is about 95 percent retail sales, said his son, Al Rose, who took over in 2001. "My dad realized the writing was on the wall," Al Rose said. Rose has made changes himself. e farm had only about 20 employees when he started, but the staff has grown exponentially since: more than 100 during the fall season, in addition to seven managers. Another 40 staff a stand during winter at Wachusett Mountain, and another 20 are at the Red Apple stand at the Boston Public Market. It took a three-generation family meeting to decide to be a part of the Boston Public Market when it debuted in 2015. "We were excited about that opportu- nity," Rose said, "and we jumped in with two feet." High failure rates Rose has an advantage Davis says is critical for running a family business well. He spent time at other businesses to gain a new perspective, and he had the right education. Rose earned a master's degree in agricultural econom- ics and worked as a buyer for years for Frito-Lay. "I can draw a straight line in the sand with family business," Davis said. "On one side are those who've only worked in Jessica Bettencourt made significant changes to the business operations at Klem's in Spencer after taking over from her father, Mike Klem. The Rose family, owners of Red Apple Farm in Phillipston, attend the opening of the Boston Public Market in 2015. Pictured (from left) are owner Al Rose, his son John, his father Bill, his daughter Madeline, his wife Nancy, and his son Aaron. PHOTO/COURTESY

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