Family Business #262

Tom Chappell:

I love the fact that all of our children grew up with friends who thought they were rich when in fact they were always looking for a handout from their parents. There was never a lot of money. When you have a business, there's never a lot of money. It always goes into the business.

Catherine Wygant Fossett:

Family firms, young and old outperform non family firms and the return on assets is greater in family firms. 6.65% greater return than non family firms.

Dr. Lisa Belisle:

This is Dr. Lisa Belisle and you are listening to Love Maine radio show number 262, Family Business, airing for the first time on Sunday, September 25, 2016. According to Forbes magazine, about 90% of all US businesses are family owned or controlled by a family. Balancing personal and professional interests within such an organization creates interesting opportunities and challenges. Today we speak with Tom and Eliza Chappell, speakers at this year's Maine Family Business Awards and with Executive Director of the Institute for Family Owned Business, Katherine Wygant Fossett. Thank you for joining us.

Dr. Lisa Belisle:

My next guests actually are a bit of a celebration, at least for me, because very early on in the radio show I had hoped to get them on and five years in almost six we have them. So I'm so happy to have both Tom and Eliza Chappell. Tom is the president of Rambler's Way. He's an entrepreneur, environmentalist, philanthropist and author. He and his wife Kate, an artist, founded Toms of Maine in 1970, which became a pioneering leader in the natural personal care business. After selling the company, they launched Rambler's Way, a wool apparel company. Eliza Lyford Chapel, Tom's daughter, is the women's wear designer for Ramblersway and the creative director manager of Ramblersway retail Stores. She was responsible for opening the company's first retail store and is in the process of opening two more stores in Portland and Hanover, New Hampshire. Thanks so much for coming in today.

Tom Chappell:

Thank you.

Eliza Chappell:

Thanks for having us.

Dr. Lisa Belisle:

So you both spoke during the award ceremony for the Institute for Family Business. And I'm kind of interested. I wasn't able to go. I don't own a family business. My family business is medicine. And we don't all work together. But what did you talk about? Why were you interested? Why did you agree to do this and what did you talk about?

Tom Chappell:

Gee, that's a long time ago. Do you remember Alexa?

Eliza Chappell:

I do. A lot has happened since then.

Tom Chappell:

Go ahead.

Eliza Chappell:

Yeah. One of the questions actually was how, how did he pass on Toms of Maine to us? And that's not what happened at all. We all grew up, you know, with an entrepreneurial background, and my parents supported us and nurtured our own interests. It was never expected that we would be taking the business over. So we're all doing our own things, each and every one of us. So we're all entrepreneurs at heart, really. But there was talk about, I know it was expected of my father to work for his father's business when he was starting out, and he ventured off on his own and wanted to do his own thing. And he's encouraged that, as my mother has as well, for all of us. So. So we all have different gifts and different interests, and it's really fun to sit around the dining room table and talk about what everybody's doing. But there was a whole range of questions. What is it like to work with your family? What is it like to work with my dad? Was one of the questions. And, you know, it's a blessing to be able to work with my family every day. And, you know, there are some guidelines around, you know, when you're in the boardroom. Sure. First and foremost, he's my father, but he's also, you know, running the business as the CEO. And there's a certain level of professionalism that happens there. It's very interesting, though. You really should be asking what it's like for some of the people that work with us, what is it like for them to be working in a family owned business? And it can be tense and comical at the same time. So to see sort of the family dynamic and how we all work together, but we all have, you know, the same core family values. And that drives us in what we do, and so it makes it easy. We all know we're coming from a similar place.

Tom Chappell:

So I think about the sailing trips that we used to do as a family, and there's nothing worse than being bound to be one of the children in a sailing vessel with your parents. But we would anchor and go off on a nice granite rock somewhere along the Maine coast and talk about what we want to do when we grow up, what are the things we like to do. And it was just sort of that early stage family development of a young family realizing that, you know, you have autonomy, and it's really figuring out what. Who you are, what you like to do, and wouldn't it be great if you could do that in your life? And that's what I love about entrepreneurship. It provides you that platform to exercise your unique talents. Hopefully that that's in your role. And really not to be bound by convention or career or corporation. It's just contained in a set of values. And certainly Kate and I have deliberately or not been clear about what we care about as a couple. And that has translated to the next generation. And so we have a second generation that is actively involved in the community, environmental conservation, entrepreneurship, helping others, whatever it is. And that's great for us to see. When I sold toms, my mentors said, well, you know, you're much too young to retire, and I certainly didn't want to join a bunch of boards and play golf. So the idea of starting another company, where could we make a difference with our skills and the money that we had acquired from the sale of toms, how could we make a difference? And pulling the family together to do that in the apparel and textile industry seemed like probably a romantic challenge. Well, it's far from romantic, but. But it was worth the challenge.

Dr. Lisa Belisle:

I don't know all of what everybody does, but I know that your son Matt has a restaurant in Yarmouth called Gather, and your sister Sarah works with horses and

Tom Chappell:

equine therapy.

Dr. Lisa Belisle:

Equine therapy. And this is Carlisle.

Eliza Chappell:

Carlisle Academy. Yeah.

Dr. Lisa Belisle:

And, well, your wife is obviously an artist. And then I believe you have another son who also is on the west coast and is doing an entrepreneurial business.

Tom Chappell:

That's Luke. He's our youngest, and he has a food business called Luke's Local.

Dr. Lisa Belisle:

Did I miss anybody? I can't remember.

Tom Chappell:

Chris, the oldest, Chris, and he works all on the communications, the digital, the E commerce.

Eliza Chappell:

He's also a musician, produces.

Dr. Lisa Belisle:

So there's something remarkably tactile about all the entrepreneurial things that you're doing. I mean, you have food at one point, you had personal products, you have art, you did fiber arts, music. I mean, there's something really in this world that has been passed on, I believe, from your generation to this next generation. And that's interesting and kind of unusual that you're trying to embody some of these values that you describe. How did that happen?

Tom Chappell:

Well, it happens certainly, because you're being intentional about it. You're nurturing what you see for talent at a very early age. And then you help each other, each member of the family, figure out where they want to go, what they want to do, and give them feedback and help and help support them. And I think that's what an entrepreneurial family, or it doesn't have to be entrepreneurial, but nurturing and supporting, guiding. Being there for them gives them the freedom to take the risk that they want to take. And, you know, there's never any guarantee for success or security. They've grown up knowing that risk taking has its consequences. I love the fact that all of our children grew up with friends who thought they were rich, when in fact they were always looking for a handout from their parents. There was never a lot of money. When you have a business, there's never a lot of money. It always goes into the business.

Eliza Chappell:

I also think from my perspective, I grew up going on business trips with my father one on one out to California, and sat in these boardrooms with, you know, the executives of cbs, for instance, and just sort of watching him. And in my earlier years, toddling around the factory and smelling, you know, the spearmint and the mint and watching the vats and how the toothpaste is made, made, and seeing my mom's herb garden outside the factory, which is where she grew actually the ingredients that we're using for flavors. And so I was, you know, they brought me to work, we went to trade shows, and that was a lot of fun. And my mom always had us in her art studio and would sort of include us and in whatever she was doing from an artistic standpoint. And I have three kids of my own and they come to work with me. And my 9 year old has already designed a pattern for a Raglan T shirt. So he drafted the pattern on paper. He chose the fabrics, the colors, the thread color. And then he got on the industrial sewing machines and put together what he could. And so it truly is a family affair. And so I think that certainly rubs off on each generation.

Tom Chappell:

You get an identity after the first generation. It's not just a legacy. It's a kind of genetic identity that this is what you do on this earth. And because starting businesses is difficult and risky, you have to know how to live with the fear, accept the fear, and carry on in faith that going to work out. But it's not for everybody, and it shouldn't be for everybody. This is a unique skill that however you find your way into it, you learn it, and it becomes part of you. And your willingness to take risks, as we have in. In a very risky industry, the apparel industry, it has perhaps the greatest number of failures of any industry. We have to be willing to take the risks in. That comes with some hardened idea of who you are, what you can do uniquely, and what you can take. So that's all wrapped up in doing it again. We haven't done it again because it's easy to do the second time around. Making apparel is a lot more difficult than making toothpaste, and it's a lot

Eliza Chappell:

more fun, in my opinion.

Dr. Lisa Belisle:

Well, this is one of the things that I'm really fascinated by, and that is that, Eliza, you are. You really have this background in fiber arts. I mean, it really is something that, I don't know, 10 years ago, we didn't hear that much about. You know, people were working in the apparel industry, but you had this interest in bringing something tangible and creating something, creating it into something which is not unlike what Toms of Maine did. I'm going to transform some of this over here and make it into something over here. But in this digital age where a lot of the commerce, I mean, we're considered to be knowledge workers, a lot of what goes on that we're selling are ideas, but you are still interested in the stuff that you can put in your hands, that you can design, that you can create into something, which is really not that different than what Toms of Maine was doing at some point. So it's your bringing something to life and then trying to convince other people that they want to take part in that.

Eliza Chappell:

Yeah, well, I've always loved working with my hands. And there's definitely, for me, there's satisfaction in the process and the journey along the way. You know, the starting point, the inception of something and something, then the end result is not just in the garment. It's actually, for me, the end result is going into the store and the customer not knowing that I designed the piece and having them try it on and the feedback that I get from them, that's the real pleasure in it. So it's really full circle, and it gives me motivation to keep creating. You can get burned out at times, you know, but as far as the fiber arts go, I mean, I learned to weave when I was in college, and after college I went to Haystack, and I was the youngest weaver there by probably 25 years at least. And it was quite an experience. And at the time, I didn't really know as much about my family history. This is when I was much younger, and since then I've come to learn it's my heritage. My mother's family business is the Cheney brothers. Cheney silk dates back to the 1800s. And then, of course, my grandfather, my dad's dad was a textile designer, and my mother's mother was an artist. And so I think it's in our genes for sure.

Dr. Lisa Belisle:

Having read your book, Tom, the Soul of a Business, I'm interested in the fact that you somehow combine really this need to succeed as a company, which is very factual and logistical. And there's, there's. You need it just. There's a very practical aspect to that. But you went and you got a divinity degree, and you really have woven ideas about responsibility into not only business that you sold, but the business that you currently have. How did this, I don't know, play itself out in your mind that these things were linked?

Tom Chappell:

Well, at times of Maine, I became very intentional about having a company that was human scale and done in the interests of our humanity. And I had seen business prior to that in which people were treated as objects. And my point of view was to treat people as having inherent worth and dignity and needed to be respectful of that. So although that was my orientation, my time at Harvard Divinity School gave me the opportunity to study the philosophy of religions, 3,5000 years old, from one thing to another, whether it was Judaism, Buddhism, Christianity, it didn't matter. All religious traditions have a very common denominator to how they think about human dignity and human aspirations. So to have an enterprise that has a set of goals, sales, profits, all of which are things you're trying to achieve and acquire those compete with your inclination to be nurturing, kind, supportive, respectful, and so forth. Because time and money are the issues that are running. You're spending money, the clock is running, you've got goals to reach. So the trick is to figure out how do you integrate the way you think about people as human people and how do you think, think about them as useful people. And there are people that have written about these philosophies, like Martin Buber in a book called I and Thou. And it's brilliant how he and others before him have rationalized this paradox of how human enterprise works. After all, we're all involved in human enterprise. We have things, things we want to do. We need to do them together, and we need to figure out how we work towards those goals in a way that is respectful and mutually supportive as a team. So while I had inclinations about this, I was able to formalize my knowledge at Harvard Divinity School and then write about it and then teach it and practice it. To have done that at times of Maine was fine, but I wanted to have a second example, which is one of the primary reasons I started Rambler's Way, so that we could demonstrate that a business that is, you know, we use the euphemism trying to do good while we're pursuing doing well. It is that simple. It's the golden rule. While you're in the process of capturing the flag, all kinds of ways you can think about it, but as a manager, a leader, you've got to embrace and acknowledge both aspects of the human being, the human mind.

Dr. Lisa Belisle:

Liza, what have you learned from Rambler's Way?

Eliza Chappell:

Oh, well, I've learned a lot about myself as a designer. I've evolved over time, but overall, I think I've learned how you can create something based off of what's important to you and your company values and the creativity that comes out of those standards or those challenges, which is being made in America, natural fibers, sustainability, you know, it puts you in a bit of a box.

Catherine Wygant Fossett:

However,

Eliza Chappell:

when you don't have everything at your fingertips, you're forced to be resourceful and work with what you have. And so the most creative things have come out of those experiences for me, versus having too many options, I guess. So. You know, I've always been resourceful and I love to problem solve. I really thrive in trying to figure out how to make something work or, you know, how do we put this fire out. And, and I love making decisions. I, I, you know, that's something I, I, I think I get from this guy over here. So I guess, yeah, I would say, you know, the creative aspect and what comes out of having to sort of work within this box of our identity and our values and what's important to us as a company. And, you know, to see people really responding to that, it's very rewarding. So,

Dr. Lisa Belisle:

Tom, what have you learned about yourself as a, not only as an entrepreneur and a business business person, and someone has a bigger ethical view of the world, but what have you learned about yourself as a husband, as a father, as a grandfather, as a person on this planet over the process of all of these. Of these two businesses that you've been running for all these years.

Tom Chappell:

Well, I do know that if I have an original thought, an idea, it's perfectly okay to pursue that thought, even though it's unconventional. So I don't mind having original thinking if it's grounded in a set of principles that make sense. And we certainly have a world that we live in right now in which we can question a lot of things that aren't adding up. So out of these times, I wouldn't be surprised if we see quite an abundance of new creations that people embark upon just because they think things ought to be different and they decide they're going to take responsibility to create that difference. Other than that, I would say that when you're an entrepreneur, you tend to think of yourself. People think of you as visionary. On the other hand, you've got to find a way to articulate that vision that attracts others that have the necessary talents for your team to be able to inspire and lead that team. So you have to be a people person and you have to be decisive when not everyone is perhaps in agreement. So I think I've learned that I am more capable of managing people, supporting people, helping people than I realized. And that has come with age and experience, with an appreciation for tolerance, understanding, willingness to listen. I'm much more of a listener and a partner today than I was as a younger entrepreneur. Burning the trails. It was my way or the highway, but I don't work that way anymore. So I'm able to be present to a grandchild or to friend in need, family member in need. And I like being able to be fully human in that sense. So I would say I'm. I'm grateful that I've had to learn these other parts of character that make you more accessible, more attractive to others.

Dr. Lisa Belisle:

This is a conversation that I think we could carry on for quite some time because I think it's very interesting to understand the dynamics of not only people, but people who are related and people who are trying to successfully run a business together. I appreciate your both coming in today and we will refer people from our Show Notes page to the Rambler's Way website. I encourage people to look into the products that you are putting out there on this planet and certainly enjoy them as well. We've been speaking with Tom Chappell, who is the president of Ramblers Way, and also Eliza Lyford Chappell. Who is the womenswear designer for Ramblersway. I really appreciate both of you taking the time to come in and talk with us today and I think people who are listening probably will have gotten some interesting ideas that they could percolate. So I appreciate it. Great.

Tom Chappell:

We're grateful. Thank you.

Dr. Lisa Belisle:

website art collectormain.com My next guest is Katherine Wygant Fawcett. Prior to joining the Institute for Family owned business in 2014 as its executive Director, Catherine was the Executive Director at the Boothbay Harbor Region Chamber of Commerce, where she oversaw the 50th anniversary of Windjammer Days, developed the Claw Down Lobster Bite Competition, and annually produced the region's definitive travel guide. She is a graduate of Bates College and the Main association of Nonprofits Executive Leadership Institute. Catherine's prior experience includes 20 years in the travel industry at Huines Travel as the director of Marketing and at Hurley Travel Experts as the Director of Sales. Thanks for coming in today.

Catherine Wygant Fossett:

Thank you so much for having me.

Dr. Lisa Belisle:

Well, you've been a lot of different places, but you have some depth as well.

Catherine Wygant Fossett:

Yes.

Dr. Lisa Belisle:

So I'm interested. First of all, what about this travel industry thing? Do you have some wanderlust in your blood?

Catherine Wygant Fossett:

Yes, and it started at a very young age, so my father was in the diplomatic service, so I grew up living in Russia, West Africa, Australia and the Pacific. And then I went to Bates and I took my junior year to University of Edinburgh and then I backpacked and trained all over Europe and I thought, well, this is kind of fun, so how do I keep this going? And I ended up working for a treasure hunter who went after a Spanish galleon that sunk in the Pacific in 1638 and when I met him in D.C. he had been in my house 10,000 miles away in the Pacific. Then he wanted to go to Oman or Cuba and dig up gold. And we had done a coffee table book on the recovery and an archaeological report. We were in the September 90 issue of National Geographic. Then he wanted to go to Oman in Cuba. And my dad, your mother, said, honey, I don't think pulling up gold in Oman or Cuba is a great idea. Why don't you move back to Maine? Because my parents had retired and moved back. My grandparents were in Walterboro. And so I said, well, what am I going to do in Maine? And she's 98% of the time, right? So I moved back and I temped for a year and I sailed and had fun and loved Portland. And then somebody said, what do you like to do? And I said, I like to travel. So he said, go talk to Steve Heughans. So I brought my book in to Steve Heughans and I said, this is what I've done. Can I have a job with you? So he hired me for a part time, temporary maybe job working out of his Brunswick office to do rail and sale packages. So I really started my job in Boothbay, so to speak then. And I did that for many years. And we started a whole boundary inbound tour division with the American Skiing Company before it was American Skiing Company and then we tied in with Yankee magazine and made it a year round product. And then we let that go and then I ended up being his marketing director for the. He had 11 offices at that time. So do I have a travel wonderless? Yes. So that's how I kept it going.

Dr. Lisa Belisle:

So how have you moved from this really big interest in the world at large to the work that you are now doing, which is fairly Maine specific. You are the executive director for the Institute for Family Owned Business here in Maine.

Catherine Wygant Fossett:

Yes. So after my travel career, I met my husband and we were, I was living in South Portland and he was up in New harbor. So we were commuting and he proposed and so I was like, well, you know, it might be nice if we're being married if we lived together. And I had traveled and moved my entire life. And so living, you know, picking up and having a whole new place to live and a whole new job was kind of. I hadn't done it in a while, but it was familiar, unfamiliar, familiar. So what I needed to do was find a job up in the mid coast. So I found out that there was the executive director job. So all the Work that I had done to do brochures and books and things like that I could apply to the Chamber. So I brought myself a marketing background and things. So instead of marketing for people to go away, I was marketing to bring people in. And it was. I worked at the Chamber for three years. I created the Claw Down. I worked on the 50th annual Windjammer Days. And so for me, it was familiar and fun because I'd been marketing travel all year, you know, all my life, but now bringing it back in, and it tied into when I had done the inbound tour programs as well. And then when I was doing that, I went to the association of Executive Directors Association. I met my predecessor, Gina, and so she and I started chatting. And so she's like, well, I live in Damascada. And I said, oh, I live in Boothbay. And then she emails me. And the way may know, she's like, our husbands have known each other for 30 years. Years like they have, you know. And so she asked me to get involved in the Institute for the awards night in 2013. So I was a judge for that. And it was fascinating for me to learn about all these family businesses and the hard work and what they do to be successful. And so that was my first introduction to the. To the Institute. And I took some ideas from that because we had our awards show at the Chamber. And then I. Gina was a deer and from the south and from Georgia. And if you remember, a few years ago, we had our lovely winter with 4ft of snow, and I got stuck in it, and she wanted to head back home. Her family and things were there. So she said, she's like, katherine, you need to apply for the job. And I said, well, do you already have a job? She's like, no, no, no, you need to do this. And I was like, okay. So I pulled up my resume, sent it in. I didn't think anything would come of it. So I had my first interview that went fine. Second interview, they called me back, then they offered me the job. And I'm like, oh, you're serious? I was like, okay. And I never worked from home before, and I didn't know what that would be like. But I said, you know what? Nothing ventured, nothing gained. Let me try it. And I had built 20 years of experience with people in Maine because I had volunteered and been in a lot of programs and boards and things. So having moved up to Boothbay, it allowed me to come back to the Portland market, where I knew a lot of people and my parents are in Scarborough. So I call that the Institute B and B. So if I need to overnight, I can stay there. And for me, it was just fascinating to do a much deeper dive into the businesses. I learned about buy sell agreements and other things. And again, I had an opportunity to take something and make it grow. And for me, that's fun.

Dr. Lisa Belisle:

Tell me about family owned businesses in Maine. I know that we interviewed Kevin Hancock on the radio show who recently.

Catherine Wygant Fossett:

He's a member of our institute.

Dr. Lisa Belisle:

Yes. And I think he might have won some sort of an award at some point.

Catherine Wygant Fossett:

Yes, he did.

Dr. Lisa Belisle:

So he's well known in his family,

Catherine Wygant Fossett:

Hancock, and they were one of the ones who started the institute over 20 years ago.

Dr. Lisa Belisle:

So obviously it's a big thing.

Catherine Wygant Fossett:

Yes. 80% of businesses in Maine are family owned. So there's probably 36,000 family businesses in the state.

Dr. Lisa Belisle:

So what is it about Maine that I guess causes families to stay in business over generations?

Catherine Wygant Fossett:

Well, 80 to 90% of all business in the US are family owned businesses. So that's a typical statistic for the US and for Maine. And they create 70 to 90% percent of the GDP globally and annually and they employ 62% of the US workforce. Their family firm performance is greater when founding families maintain an ownership stake. So like Kevin Hancock is the sixth generation running a family business. Family firms young and old outperform non family firms. And the return on assets is greater in family family firms. 6.65% Greater return than non family firms.

Dr. Lisa Belisle:

So Maine is not that different than the rest of the country, is what you're saying correct. What is different about Maine family owned businesses versus family owned businesses elsewhere or is there a difference?

Catherine Wygant Fossett:

Well, I just had Colleen McCracken, who's our chair of our institute, she's also the CEO for Planet Dog and she was just recently at a trade show and she said that there were only a few family businesses that were involved in that industry and they don't have an institute to help them. So they were like, oh, wow, you have that in Maine. So our history is that Shep Lee from Lee automars was looking to transition his business from the first to the third generation. And there weren't resources for him in Maine. So he and Kevin Hancock and other family members Hussey Seating went to UNH because they had a family center. And Shep being Shep said, well, why don't we have this in Maine? So he started it with his daughter Cassie and they were part of, we were part of USM. And then in 2008 we had some funding challenges and we became our own independent 501C3. So what I think is helpful about the institute and helping family businesses is that Mainers do tend to, to help each other. And with the institute, it gives them a venue or an avenue for them to connect and to be able to help each other.

Dr. Lisa Belisle:

What types of things does the Institute for Family Owned Business offer to the businesses here in Maine?

Catherine Wygant Fossett:

We have four different affinity groups. We work with CEOs, we work with women and family business. We have a women's leadership forum, and then we have a next generation. So these are groups that are meeting regularly, some have a facilitated coach, and they come up with discussion topics that are a challenge for them and then they work and share through that together. The CEOs have dinners and if they have issues that come up about health care or other things, it's a venue for them to be able to share that. And they all come from different industries and some different size businesses too, so they get a different perspective. And then like today I have a golf clinic for women because sometimes business involves golfing. And so we, we have, we have those affinity groups. And then I also do other programs. So we have our Maine Family Business Awards, which I said I got involved with. This year we had a record 180 nominations. We had 300 people come. We gave away seven awards. It's a big celebration for family businesses. And then we also do a family business spotlight where we highlight different family businesses. And then we do an HR for the Family Business series that. So how do you set up worker file? Because a lot of times people are so busy running their business, they don't necessarily know all the requirements and things if they don't have an HR department to manage and handle that. And then this year, each time we have a program, we do a survey and then we look back at those and say, well, what do people want? And they wanted to go back to our roots with succession planning because we help people succeed so they can pass it on to the next generation. So we have a series of three programs. One has already happened, Succession Planning 101. We have 57 people with standing room only, and it was the family coming in with the parents and the children to set things up, because 96% of people believe that they should have an exit strategy, but only 13% actually have a written plan. So we're trying to help them. So you won't get all the answers in that one program, but you can get started. And one piece that Jane Hilbert Davis, who ran It I think was a really good takeaway is she said, do a fire drill, find out if, if you got hit by a bus, how are you going to manage things? And then the other one is she had an assessment tool and said, go from zero, which is okay, everything's fine, to three oops, we need to really work on this. And so I think we did that at Husson University and we allow people to remote in because we're a statewide organization. But a lot of our programs happen here in Greater Portland because we only have one employee, which is me. You know, but with technology, people can remote in and be a part of it. And then on August 24th, we're going to have awareness and conflict resolution. Because if you're trying to do succession planning, there might be some conflict in a family business. And you want to make sure that Thanksgiving and Christmas or the holidays, family members are still going to get along and not have the business get involved or. And then in September, we're going to do one about a transition with a panel for transitioning a regular family business with Sun Media Group, Jim Costello. And then we're going to have a Rock City roaster, Suzanne Ward. And then we're going to have. And she's a co op. And then we're going to have an esop, which is Danielle Moody's from Moody's Collision Center. So keeping the business within the business, not an outside sale.

Dr. Lisa Belisle:

Tell me what some of the challenges would be with, say, succession planning that are specific to a family business.

Catherine Wygant Fossett:

Okay, so some of there's that there's an often quoted statistic that's 30, 13 and 3% chance that a family business will go from the first generation down to the fourth. Now, as I said said, family businesses have succeeded and they do very well. But as you get further into the generations, it can sometimes be a challenge. So they need to be able, the incumbents need to figure out who is going to be the next successor. Is that someone within the family or outside the family? We did do a program with Kevin Hancock where we had at least all businesses. It was CEOs with at least three generations. So we had Kevin Hancock and we, we had Mike Berio from Central Distributors and we had Gene Geiger from Geiger Brothers. So they were the three family member CEOs. And then we had three non family member CEOs because sometimes the best way to keep your business in your family is not to have it run by your family. So we had John Isaacson from Liato Malls, we had Bob Moore from Dead River. And then we had Steve Cody from Charles Insurance. And he's kind of, he's unique because he's kind of a placeholder for the family as the next generation comes up. So he's working with them. And we had over 70 people come to this discussion about, you know, the family business member versus the non family member. And when you do set up a succession planning, Jane Hilbert Davis recommends an integrated planning model and that has an estate plan, a personal financial and lifestyle plan, a manorship, an ownership succession plan and a business plan. So there's lots of different parts and things that are tied into that because you need to make sure that the incumbents have enough wherewithal or their lifestyle to support them. But then you also need to be able to have the next generation be able to buy out or be a part of that and then determining the value of evaluation of the business. So there's a lot of factors and it needs to be planned out. And a lot of our consultants that we work with, we have family business members and then we have associate partners, and those are the bankers, the lawyers, the insurance companies who work with the family businesses is that you need to have the business ready for a sale or for growth or a transition because you don't know when you might need to do that.

Dr. Lisa Belisle:

When it comes to families, I, I think about just the stresses of being in a normal family.

Catherine Wygant Fossett:

Yes.

Dr. Lisa Belisle:

Where you have. Sometimes emotions can get high, disagreements can occur. I mean, best case scenario, people get along great and there's no problem and you know each other really well because you share some of the same genetics and the same upbringing. But when you hit that other place where there are some personal disagreements and people have to put those. I don't know, I don't know if you want to put them aside, but somehow manage those personal issues when dealing with larger organizations. How does that happen?

Catherine Wygant Fossett:

Well, sometimes people manage it and sometimes don't. I mean, I get crisis calls that says I can't work with my brother or my sister or can you help me? So then we can connect them with people who. Mediators or people who can facilitate that. But I think the most important thing is communication and that you need to set ground rules. So how. And it also ties into who has ownership of the company as well. So do they have a voting right for ownership or is it, you know, a spouse or someone else who. They call them the dark holes who put input into it. But they're not really in the family business, you know, So I think you need to have clear Roles and definitions of who are the players and where are they. And then if issues come up, then you have agreed upon rules of engagement, how you're going to talk about it and how you're going to move things forward. And healthy families do that and communicate regularly. And they have family councils or family boards that meet regularly and cover the conversations because if they don't, then it can be very dysfunctional. And you'll see fractures in companies, you know, that break off or do different parts because they don't get along.

Dr. Lisa Belisle:

Because not all family owned businesses are owned equally by partners. Are there ever situations where somebody is maybe a 75% partner, somebody is a 25% partner, and, and maybe they don't have exactly the same way of approaching things. Is that ever something that you see? And if that's the case, how does that usually get handled?

Catherine Wygant Fossett:

Well, I think it depends on how the company structures themselves to handle things. Sometimes they bring in mediators or people to help. The most successful ones are ones that address that. And, and like I said, a lot of companies will put in rules about family members being able to work in the family business. And at what age can they come in? Or do they need to get outside experience? And is it when some of them, if they're looking for a CEO or person, that they have a very transparent set of rules and skills and qualifications. So it isn't that they just get anointed and get put into that position without the skill set. I think what helps a lot of our members are these affinity groups where the next generation of people get together and they talk about those issues, you know, because if you are the son or the daughter of the owner, it can be a challenge for you, you know.

Dr. Lisa Belisle:

Yeah, I guess I could see it both ways. I could see it being a challenge if you say you're an employee who's worked for a company for a very long time and the son or the daughter has not very much experience, but obviously they're going to come in and work with the company and maybe you don't feel so great about that, or maybe you're the son or the daughter and you actually have quite a lot of experience. But you're going to come in and work with a company and you don't feel like Miravu experience is valued because they just assume you got it.

Catherine Wygant Fossett:

And it's especially hard if they known the kids since they weren't diapers and were going in. And then they're going to start being the bosses of people who have been managers there for Quite a long time.

Dr. Lisa Belisle:

I'm interested in this dark hole idea. So you have people that are actually in the business and then there are other people who are not technically in the business, but somehow they, I don't know, exert some influence over the company.

Catherine Wygant Fossett:

Yes.

Dr. Lisa Belisle:

Is that usually a spouse issue?

Catherine Wygant Fossett:

It can be a spouse, it can be a sibling who's not really in the family business, not part of ownership. It can be challenging when people get divorced. You know, how does that affect things? So again, the best laid plans is to lay it out about who has ownership, who has rights, who has voting rights, who's tied in with it, and how do you manage what they call the black holes? Because they're going to influence, you know, if one person gets a car, does everybody in the family get a new car? Then you know, it's. And if it's tied in, some of those things are write offs are tied into the business. It can be challenging.

Dr. Lisa Belisle:

I think the way that a lot of people, it seems like to deal with conflict is to not deal with conflict.

Catherine Wygant Fossett:

Correct.

Dr. Lisa Belisle:

And if you are in a family business, it seems like that's less of an option for you. It's if you know that you're going to probably be affiliated with this family business for the foreseeable future, it's not like you're going to just be like, well, fine, I just don't want to work with you anymore. I mean, it seems like you're kind of put in a place where you need to engage, you need to work with the conflict.

Catherine Wygant Fossett:

Right.

Dr. Lisa Belisle:

Is that true?

Catherine Wygant Fossett:

Yes. Well, successful ones are. I mean, as I said, I have gotten distress calls for people where the family is in trouble and they're not communicating and I reach out to them and I try to hook them up with resources. And then a lot of family businesses are very private and so they think they all have unique challenges. And then when they get around or they come to a program, they're like, oh yeah, my mom and dad are driving me crazy too, or I've had this and that. So they find a safe avenue of peers who are experiencing the same thing and that helps them get through it. But then those are ones who call me and then they don't follow up with it. So, you know, if it's a big elephant in the room, they need to address it, you know, and they're not going to be successful if they don't. So a lot of the family businesses that we work with are successful because they have communication and they put those tools in place.

Dr. Lisa Belisle:

So it's interesting to me that even though you it seems as though this background that you have, being the daughter of a retired ambassador, it seems like maybe it's not relevant, but actually it seems kind of relevant. It seems like diplomacy.

Catherine Wygant Fossett:

Oh, yes. My favorite color is plaid.

Dr. Lisa Belisle:

Yeah, it's kind of in your blood.

Catherine Wygant Fossett:

It is. And I was a psych major at Bates, so I find it all very interesting how people work. And, you know, I got married older in life and I didn't have any of my own children. I have some stepchildren. So for me it's kind of like I love family and family things. So I find it very magical when I can help a family business, when I see a younger person or next gen, and that they're very, the family businesses are very open. They share. I mean, I have to keep things in confidence, but they're very open to share with their peers. And, you know, they're struggling and, you know, and if we can help them or give them some direction and make them successful, then I've done what I need to do for the day. You know, it's very rewarding to me.

Dr. Lisa Belisle:

For people who are listening, I will encourage you to go to our Show Notes page and we will give you a website for the Institute for Family Owned Business and how to get in touch with Katherine Wiggins. For now, I will just say that I really appreciate your coming in and having this conversation with me, and I've learned a lot, so thank you. That's always a great thing. I'm sure people who are listening have learned a lot as well. I've been speaking with Katherine Wygant Fawcett, who is the Executive Director of the Institute for Family Owned Business. I appreciate your time today. Thank you.

Catherine Wygant Fossett:

Thank you very much. I enjoyed it.

Dr. Lisa Belisle:

You've been listening to Love Maine radio show number 262, family business. Our guests have included Tom and Eliza Chappell and Katherine Wygant Fawcett. For a preview of each week's show, sign up for our E Newsletter and like our LoveMain Radio Facebook page. Follow me on Twitter as DRLISA and see my running travel, food and wellness photos as bountiful1 on Instagram. We love to hear from you, so please let us know what you think of Love Maine Radio. We welcome your suggestions for future shows. Also let our sponsors know that you have heard about them here. We are privileged that they enable us to bring Love Maine Radio to you each week. This is Dr. Lisa Bellio. I hope that you have enjoyed our family business show. Thank you for allowing me to be a part of your day. May you have a bountiful life.

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