All in the family

When Edward Hill bought a tobacco and grain farm that rested on the banks of the James River just outside Richmond, Va., he probably had no idea that 11 generations later, it would still be thriving as a family-owned and operated business hosting weddings, corporate meetings and large-scale events. Today, the Shirley Plantation, purchased in 1638, is considered the oldest family-owned business in America.

That such a business would still remain within the same family for nearly 400 years is unfathomable according to the Family Firm Institute, a Boston research company. Only 30 percent of family-owned businesses survive into the second generation, dropping off to about 12 percent in the third generation, and a paltry 3 percent in the fourth.

In Reno, one of the oldest businesses to continuously remain under family control is the Dr. Pepper/7 Up Bottling Company of the West. Edward Frazer is the president of the company's three branch operations, a third-generation descendant of Edward Chism whose ice cream company, begun in 1905, was the genesis of a sprawling enterprise that today includes operations in Chico, Calif., and Boise, Idaho.

When Frazer decides it is time for him to relinquish the chief executive's chair, his daughter, Molly Vestal, will assume that role.

"The No. 1 challenge for all family-owned businesses today is succession," says Scott Wait, a managing director of The McLean Company's Reno office. Founders, he says, like to maintain control. They do not want to be someone else's boss. "They are personally invested in the business they started. Less than half of the small- and medium-sized companies we deal with those with revenues around $10 million do not have a succession plan in place."

For all small businesses today, there are four options facing them when it is time to transfer ownership or control. Sell or transfer to family members. Sell to management partners or employees. Sell to a total outsider. Or, close the doors entirely.

The Chism Ice Cream Company began in a small wheelhouse alongside the Truckee River. The current would push the waterwheel that turned the ice cream maker. Chism's own formula became very popular throughout northern Nevada. He sold to cafes, stores and hotels throughout the region.

His great granddaughter, Molly Vestal, is executive vice president of the bottling company. She talks about Chism picking up a franchise to sell Hires Root Beer in the 1930s, then later adding RC Cola and 7 Up.

"I've been around the business my whole life," she says. "I worked here in the summer. It was always something I enjoyed. I remember when I was 15, I would work in the front office, filing and answering phones." Today, she has a degree in marketing and says the succession plan is in place for her to succeed her father at some time in the future.

The ice cream business no longer exists. It was purchased in the 1960s by Carnation, which kept the Chism name on the product until the mid 1970s. Today, soft drinks carry the day. The company has grown profitability by adding more brands. It is a franchisee of the Dr. Pepper Snapple Group. In the mid 1990s, the Reno operation purchased the 7 Up/RC bottling plant in Chico, and in 1997, it added Treasure Valley Beverages in Boise.

"It has been one of the high points for us," says Vestal, "and has shown consistent growth over the years."

Not all succession plans work as smoothly as the bottling business has for Chism's descendents.

"One owner we worked with tried having his two sons take over the company, and unfortunately, it didn't work out," says Wait. "The sons did not have the same way of doing business, and the owner felt they were actually hurting the company. Now, it is being prepared for an outside sale."

One venerable firm that has been in the same family since 1929 is Scott Motor Company of Reno. The company is facing a challenge from General Motors, which notified the company that it intends to terminate the dealership relationship for GM's Cadillac and Buick models. Ben Scott is the son of founder Keith Scott, who purchased what was a Buick dealership in December of 1929, just two months following the Wall Street stock market crash.

"I've heard stories of how my father came to own the business," says Scott. "Apparently he went into a dealership one day to see about buying a car. The salesman looked at him, sized him up and said something like 'Go away, kid; you bother me." That didn't sit well. So a few years later, he bought the store and then fired the salesman. He paid $250,000 for the store. Then, in January of 1930, he added Cadillac and, later on, Pontiac, Oldsmobile, GMC trucks."

The younger Scott subsequently acquired 25 percent of the business, and when his father died in 1986 he inherited the rest of it. In 1989, Scott added the Land Rover line.

The auto dealership business is a crazy one, Scott says, because of the intense competitive nature and the economic swings. "We've gone through the years when the product was terrible," he says. "Now, it's good, very good."

Scott's son, Casey, has also joined the business as used car manager. How does he feel about the potential loss of the Cadillac and Buick franchise?

"Timing is everything in this world," his father notes philosophically. "Since he was 16, he worked to become a pilot for United Airlines. He just got comfortably on board when 9/11 happened. He's since had a number of other jobs and now he is in the car business. We'll see."

Scott Motors has 35 employees and a body of loyal customers that Scott says are very upset with General Motors. "We still have the Land Rover franchise, wonderful repair facilities, and, with this economy, we are sitting in a building that's paid for. It's going to be a tough ride for awhile."