It's all relative: can a newcomer revitalize a family business—without igniting a family feud? Learn from 3 entrepreneurs who did just that

Entrepreneur, March, 2005 by Chris Penttila

The Picataggios gave Ellen's parents an ultimatum: Either you let us change some things, or we're outta here. "We sat down and said, 'If this is just going to be a Motel 6, we can't stay here.' That was step one," Ellen says.

The Picataggios also pressed her parents' hot button--the bottom line--by writing a business plan, preparing a sales pitch and letting them do the math. It worked: The renovation was completed in 2003, redecorated rooms are going for $115 to $122 a night, and The Farmer's Daughter has become a Hollywood nightspot for celebrity parties. Sales for 2005 are expected to reach $2.3 million.

Family members have to make a stellar case for any changes they propose, says Larry Bennett, director of the Larry Friedman International Center for Entrepreneurship at Johnson 8: Wales University in Providence, Rhode Island. To be taken seriously, "you have to quantify your rationale better than you would in a nonfamily business," he says. "You have to have an attorney's mind-set. That means knowing the answer before asking the question."

For the Picataggios, approaching Ellen's parents as investors and understanding their perspective was also key to changing their minds. "You have to keep it on a professional level," Ellen says. "That made a huge difference."

SMOOTHING RUFFLED FEATHERS

Mark Schnepf represents the third generation to run Schnepf Farms, a family farm started in 194a by his grandparents in Queen Creek, Arizona. But his original plan was to become a corporate attorney. "Growing up, I never wanted to be a farmer," says Schnepf, 46. "The work was too hard, the hours too awful."

When the farm ran into financial trouble in the early 1980s, Schnepf's dad, Ray, asked him to take a break before law school to manage the financial end of what was then a 5,000-acre working farm with 100 employees. "I started working with my dad and never left," Mark says.

The younger Schnepf, however, realized the farm needed to revitalize itself or it would go out of business. Mark and his wife, Carrie, 44, started incorporating public events, including an annual Peach Festival. Ray, who passed away in 1995, was excited about the direction the farm was heading.

But his room, Thora, wasn't happy as the farm downsized both staff and acreage to branch into "agritainment," promoting itself as Arizona's "premier family entertainment farm" with petting zoos, a train ride and festivals that now draw thousands of people. Farm employees balked at interacting with the public, and old customers of the farm's roadside fruit and vegetable stand didn't like the changes, either.

The Schnepfs encouraged Thora to come to events on the farm, where she "warmed up to the idea," Mark says. "She became a local celebrity." They met with employees and explained how the changes were about survival and being able to pay people more, which improved morale. Today, the farm has 10 full-time employees, 110 seasonal employees, and annual sales of about $2 million. The Schnepfs believe they're staying true to the farm's legacy by keeping it alive--in fact, Mark thinks his biggest mistake was not changing faster because he didn't want to ruffle any feathers. "Don't be afraid to make changes," he says. "[Waiting too long] cost us a lot of money and time."