Multiple Iowa companies are keeping it in the family as they look toward the future — a move that is difficult to master without a proper plan, experts say.
“The best time to start thinking about your business strategy is the moment you open your business,” said Lisa Shimkat, statewide director for the Iowa Small Business Development Center.
Within the last month, two large central Iowa companies announced succession plans that keep leadership within the family.
Vermeer Corp., the Pella-based equipment manufacturer, said Jason Andringa would take over as CEO next year, replacing his mother, Mary Andringa. She is set to become Vermeer’s chairwoman while her brother, Bob Vermeer, becomes chairman emeritus.
Ruan Transportation Management System, based in Des Moines, named third-generation family member Ben McLean as its next president and chief operating officer. Earlier this year, parent company Ruan Inc. named John Ruan IV as its next president and COO.
At Vermeer, company executives said the family succession is meant to last.
“By continuing our legacy as a family-held business, Vermeer provides stability and continuity that our team members, customers and dealers are looking for over the long term,” Chairman Bob Vermeer said via email.
The company has been preparing for Jason Andringa to take the reins since 1989.
About 25 years into the company’s history, Mary Andringa said her family started working with consultants to develop the third-generation of Vermeers as future company leaders.
“Many years back, my dad brought our family together and said ‘we have the opportunity to sell the business, are we interested or do we want to stay involved?’ ” Mary Andringa said. “We said ‘no, we want to stay involved in the business.’ ”
Vermeer developed a family employment policy, which required members to earn at least a bachelor’s degree and work outside of the company before coming back to Vermeer, among other requirements.
“We always talk about how it’s not a birthright … It has to be earned and there has to be real performance,” she said.
For Jason Andringa, that path included studying engineering, earning a master’s degree from the Massachusetts Institute of Technology and eventually working in NASA’s Jet Propulsion Lab.
Now, Jason Andringa and his family are working to expand Vermeer’s global presence and bring it closer to being a $1 billion company.
“We have dealerships all over the world, but there continues to be an opportunity for us to increase our presence outside the United States,” he said.
Simon Bowe, the president of Bowe Machine Co. in Bettendorf, hopes his company remains a family business.
“I’ve always said that I’d like to create an opportunity for family … and turn over a company that is stronger than what we got,” said Bowe, who is the third generation to run the business.
The company makes shear blades for cutting metal, along with other machining work.
Bowe’s grandfather founded the company in 1956, working with only eight or nine others. Now, Bowe said, it has 71 employees and is going through an expansion.
Passing the baton
Passing a company down to the next generation does not always end in success.
Only about a third of companies survive into the second generation, according to a 2007 study by the Family Business Institute. The chances of success drop significantly as family lines continue, falling to just 3 percent survivability by the fourth generation.
One Iowa example is Regency, the Des Moines-based builder, that went bankrupt in 2009.
Michael Myers co-founded Regency, once Iowa’s largest home builder, in 1986. His sons took over after he died in 2006.
Two years later, Regency laid off its entire staff and halted construction on a number of project after Wells Fargo pulled its line of credit.
To help ensure the success of the next family member, companies should talk to trusted advisers that are not part of the family, said Steve Jacobs, president of Des Moines-based management consultant firm BCC Advisers.
“Family members aren’t always very objective when it comes to (evaluating) skill sets of family members,” Jacobs said.
Shimkat, from the SBDC, said family members also need to effectively communicate what they want to happen during a succession.
“You need to sit down with all family members because with a family business transition, you need to make sure everyone is on the same page,” she said.
By the numbers
30: Percent of family-owned businesses that survive into second generation.
12: Percent that survive into third generation.
3: Percent that survive into fourth generation and on.
Source: Family Business Institute, January 2007 study
Examples of Iowa family businesses
Family legacy: 1948, founded by Gary Vermeer, the father of Bob Vermeer and Mary Andringa. Bob Vermeer started in 1974, and currently serves as chairman. Mary Andringa started in 1982, and currently serves as CEO. Jason Andringa, Mary’s son, started in 2005 and will become CEO in November 2015. Mindi Vanden Bosch, Jason’s sister, serves as Vermeer’s continuous improvement manager.
A number of family members also serve on Vermeer’s board of directors.
Industry: Manufacturing of agricultural, construction, forestry and mining equipment
Family legacy: 1932, John Ruan starts his trucking business, which eventually grows into the Ruan family of companies. John Ruan III currently serves as chairman. John Ruan IV serves as president and chief operating officer and his sister Rachel McLean is a vice president.
Ben McLean serves as the president and chief operating officer of Ruan Transportation Management Systems, a Ruan subsidiary. McLean is a third-generation family member, the company has said.
Based: Des Moines
Industry: Various. Ruan Inc. owns Ruan Transportation Management Systems, Bankers Trust and Avis Car Rental, among other companies.
Hurd Real Estate
Family legacy: 1981, founded by President Richard Hurd; sons Richie, vice president, and Daniel, sales associate, joined in 2008 and 2012, respectively; daughter Kristin Hurd runs business development for Hurd Real Estate.
Based: West Des Moines
Industry: Real estate development and investment
American Pop Corn Co.
Family legacy: 1914, founded by Cloid Smith; son Howard Smith becomes president in 1939. Howard’s sons, Chesley and Wrede, serve as chairman and president starting in 1966. Carlton Smith, the son of Chesley, currently serves as chairman and Garrett Smith, the son of Wrede, serves as president.
Based: Sioux City
Industry: Food production
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