Family-business owners control their own destiny, They write their own checks, punch their own clock, and share work and wealth with people close to them. But it's estimated that more than 70% of family businesses don't make it through the second generation, and of those businesses that survive, 10% remain after the third generation.

Family-owned businesses daily confront issues foreign to most manufacturers: They grapple with close personal relationships juxtaposed with changing business demands, and they face years of hurdles to keeping their surname on the president's door. Family executives and those that counsel them say early planning for potential obstacles can be a beacon that guides companies from generation to generation. Those plans should include assessing the interests of children in leading the company; nurturing and developing their talents; establishing parameters of responsibility and authority among family and nonfamily employees; and gradually carrying out a smooth succession.

Who's In

Who among the family is willing to carry on the legacy? Frank dialogue should address the issue as soon as an owner's children begin plotting their adult futures. A mutual, open sharing of work and career ideas among family members can be the rock on which the family business is anchored.

At Power-Pack Conveyor Co., Willoughby, Ohio, Jim Ensinger showed up at work with his father Earl Ensinger at the age of 14. "We learned the value of money, and we learned that you worked as a family," says Jim Ensinger. "Nothing came for free."

His dad founded the company in 1929, and one day asked his son and daughter, "Do you want to own this company?" Jim Ensinger confirmed what he'd been telling his dad since high school: "Everything I did and all the conversations we had were that I was going to be running the corporation. "

As an eight-year-old DeWayne Cassel was at his father Alvie Cassel's side at ACT Bending & Steel Co., the fabricated tubular products manufacturer the elder Cassel founded in 1970 in Peoria, 111. "We had a number of conversations about having the opportunity to own your own business and have a little bit more control over your destiny than working for someone else. That always was appealing to me.... [My father] had to carve something out of this world to survive, so he really stressed that you can't rely on anyone but yourself, and one of the best ways to do that is to own your own business."

Once In, Get Out

Many successors-to-be, once they've identified their goal, plan college course work based on needs of the company. Once they have graduated, successors can learn valuable lessons by earning business wings at someone else's expense.

"Make some mistakes on [some other company's] payroll, but at the same time learn how other people do things," advises Edmund W. Rothschild, chairman, Family Business Succession Planning LLC, Cleveland. "You get a feel for business different and apart from what you learned at your father's knee."

DeWayne Cassel spun early ACT job experiences in the 1980s into a successful 14-year IT career. When his father and mother, Bettie, decided to retire in 1996, they queried DeWayne and his two sisters on their interest in leading the firm. Each presented a buyout package to the parents, and DeWayne's was chosen. The IT career -- consulting with a variety of industries and management styles -- was invaluable, he says. "It's given me so much more insight in how to work with corporate America."

Theodore "Ted" B. Smith 111, president John Hassall Inc., brought to the 148-year-old family business a similar wealth of outside experience. For four years he worked in institutional equity trading and risk arbitrage at Bear Steams in New York. Ted is the fifth Smith to sit in the president's seat of John Hassall, a Westbury, N.Y., maker of custom-formed and machined parts.

"It's important that you have other experiences prior to coming into a family business to broaden your horizons and see how other businesses are run," he says.

Outside experience not only benefits the family member who steps in -- by adding legitimacy to the "hiring" and by giving him or her a broader knowledge base -- but it also impacts company growth. The financial and day-to-day expertise Ted Smith brought back to John Hassall has allowed his father, Theodore B. Smith Jr., chairman, to focus more on new opportunities for the company.

"If you're coming in you need to bring ... fresh ideas and new perspectives," says Ted Smith. "Otherwise it's going to be so limited to past practices that, I think, it would be very detrimental to the workforce. As they see someone else coming along or they work with the next generation, they're going to be looking for something [new]."

Roles And Responsibilities

A lighting rod for family-business disputes are the roles and rewards of family members. David Gage, founder of BMC Associates, a Washington-based company that specializes in mediation services and dispute resolution, says these are the "issues of who's going to do what, who's going to be in charge of what, and who has what kind of authority." Gage, a clinical psychologist who grew up in a family business, says, "Owners, partners -- it doesn't matter if they're family or not -- most typically do not do the work upfront that they need to do to clarify how they're going to work together and be partners." ffis group encourages clients, frequently in dispute, to go back to square one and develop a "family partnership charter," a written document that helps clients to:

• Analyze what each party brings to the business and expects from it -- what Gage calls "partner's interpersonal equity."
• Pursue scenario planning in which "all the partners brainstorm about all the things that could come up, things that most people don't think about -- or they certainly don't talk about -- when they're getting in business together."
• Delineate business roles and responsibilities.
• Establish mechanisms for maintaining communication even amid conflict.
• Plan thoroughly for the end, detailing how members can get out of the business.
• Help family members understand each other's personal style and values.

Mychael Margott guided Excalibur USA, Oxnard, Calif, a manufacturer of blinds and window coverings, through a family dispute. He and his brother Tony Margott started Excalibur in their mother's garage in the 1980s. "Two years ago, because of so many disputes with my brother, I had to buy him out of the business," says Mychael Margott, president.

Tony Margott proceeded to establish a retail business, while Mychael, now one of his suppliers, has guided Excalibur,,Aith more of the uninhibited drive of an entrepreneur, something he says his brother lacked. "We worked together, but we had different points of view," Mychael says. Since the split Excalibur has grown rapidly, from 60 to 160 employees, and increased sales to $14 million.

Though undeniably headed by Mychael Margott, Excalibur remains a family business -- management includes his wife, mother, sister, brother-in-law, and sister-in-law. Mychael Margott has three sons who may one day find themselves facing issues similar to the ones that confronted their father. He hasn't discussed plans for succession but his 9-year-old son has been replacing his father's name on business cards with his own.

Transition To Succession

Succession, even with an able candidate identified, won't occur overnight. In addition to gaining an outside business perspective, it's imperative that successors gradually get the lay of the company land. The workforce becomes familiar with new management, and suppliers and clients are reassured that it's going to be business as usual, if not better.

Rothschild says this in-company preparation assures the workforce that steps have been taken for the continuity and well-being of the company. "They're not looking for new jobs every time the boss sneezes," he adds, and employees get comfortable with the successor's abilities and style. Ideally, Rothschild adds, successors should be given responsibility for a project and should be left to complete it with the founder available for consultation. Gradually, projects should get larger and involve less consultation.

At Power-Pack, Jim Ensinger went on sales calls with his dad and watched him design conveyor systems, worked in production as soon as he reached 18, held a sales territory prior to college, and was challenged on the spot to solve problems. Ms father impressed upon him a philosophy that he is passing on to his two sons, Eric and Kevin, who are both in the business: "Learn the business inside and out. You may be strong in areas and weak in areas, and you can hire people [to compensate] for that, but you have to understand the full function of how a business runs."

DeWayne Cassel says the majority of the 20 employees at ACT watched him grow up in the company, working in a variety ofjobs, from floor sweeper to machine operator to general manager. "One of the best things that occurred for me was actually getting out there and understanding the core business," he says. "That doesn't mean sitting in the office and meeting the customers. It means getting into the gut of the business and understanding what it really takes to run it. You have to know your business instinctively. You should be able to walk out into the plant and hear that something's not right, sense and feel and smell that something's not right."

Succeeding With Succession

"There is the issue of 'When will it happen?"' says Gage. "That comes up between father and, most typically, sons. 'When will my father loosen his grip on the reins?' As one son in a family business put it, 'Is there light at the end of the tunnel? Will my father ever really retire?' Very often sons have this fear that they'll never get the chance to run the company or that it will come when they're old."

Some of the biggest names in family-owned businesses include Hallmark Cards Inc., Levi Strauss & Co., and Estee Lauder Cos. Inc. Arthur H. Kroll, CEO of KST Consulting Group, New York, has worked with these companies and says, "Founders feel very strongly about their fan-dly-owned businesses; they want their children or relatives in the business, and they bring them into it. But they're not always ready to give up control.... It's one thing to transfer to an existing employee or sell out the business. It's quite another to give it up to your son and say 'I will have nothing further to do with it."'

Often at the core of a founder's reluctance to let go is a clash of ideologies -- an aging founder who looks toward the company to provide a conservative source of retirement income, and an emerging corporate leader who wants to make his or her own corporate mark. Old vs young. Parent vs child. Risk adverse vs risk taker.

"Nobody wants to be thrown out," says Rothschild. "Kids have to recognize that for the emotional stability and emotional well-being of the father, he wants to be needed and he needs to be wanted." He recommends working out a plan that allows the child to steadily assume more control, while the founder or current leader gradually relinquishes control.

"This corporation was passed on to me while my dad was alive -- he could see it happen, he could be there to support me, and he could be there to retire from it," says Jim Ensinger. "When he transferred the business over to me, (he said] 'The turn is now yours, you can do what you want. If you want, you can become the president."' Jim Ensinger willingly kept his title of vice president until his father died. "We had always shared ideas. My best friend in the world was my dad, therefore it made it very simple. I had a handful of fiiends whose parents owned companies, and they were constantly fighting and bickering, hollering and screaming. We never had that. "

Ensinger, at 56 years old, says he's already "giving the company away," and that a lifetime of gradual preparation, following his father's example, makes him prepared to enjoy the rewards of his work. "You want to enjoy life," he says, "and you want to prepare others so that they can continue on instead of dumping it at their doorstep and saying, 'Now it's yours, thank you, goodbye.' You can't do that. Nor can you force someone into taking something they don't want. That's even worse."

Conflict Resolution Even the most careful family-business planning won't always prevent conflict. That's because it's not the future that presents problems, but the past. Betty Ann Richmond, director, Family Business Institute, Seattle, says family problems are frequently left to smolder and gradually reappear in the business, manifesting themselves as tension, unease, gossip, and put-downs; arguments over insignificant events; and business problems spilling into family activities. She says at the heart of these disputes are "leftovers" from earlier family issues. "The CEO/employee may have to go back to the original father/son dynamics. [Issues] are often unresolved and they resurface.... You may keep recycling the same battles and never get any resolution unless you know where you're coming from." And don't expect to resolve all conflicts yourself, Arthur Kroll, CEO of KST Consulting Group, New York, says it's helpful to have a small outside advisory board that can clear the lines of communication among family members. The group doesn't need to be a board of directors or consultants; it could be good business friends or respected leaders. In some instances family businesses just don't work. David Gage, founder of BMC Associates, Washington, says, "it takes a really healthy family relationship to have a healthy family business. For a lot of families working together day-to-day is just too much of a strain on their personal relationships.... Sometimes in mediation what happens is we help people recognize that they might be better off not working together. Then the issue is what is the best way to untangle things and help someone start down a new path."

IW Growing Companies is located on the Web at www.iwgc.com