Features

The 3rd Annual Minnesota Family Business Awards

By Nancy Eike

Family businesses are arguably the most fundamental and spectacular examples of fortitude and tradition in a business era where nothing seems sacred and even less is safe. They are legendary. They are brilliant. They are inspiring. They are necessary.

Yet they are often overlooked and frequently taken for granted because they are such a different sort of business machine. To an outsider, and even some aloof insiders, they seem deceptively simple and pure: The physical manifestation of a happy family doing good work together, equally accountable and entrenched in each other's prosperity. In that regard there is an implied innocence to family businesses-they are Mayberry. Although we would love them to be that, and surely that ideal is noble, they are so much more complex, which is why they are fascinating.

The family businesses you are about to explore-legacy and emerging-are notable not so much because they've successfully passed the torch from generation to generation, but because they have the resolve to be something very difficult, and to be that thing very well. They are uniformly able to perpetuate their business, maintain family accord and grow their bottom line; all the while living up to a perpetually rising standard set generations earlier and weighing heavily on generations to come.

So, as we open this year's celebration of the best family businesses Minnesota has to offer, we are compelled to shut our mouths and let their amazing stories speak for themselves. Enjoy!
–Drew Wood

 


August Schell Brewing Company - Legacy Award Winner

The August Schell Brewing Company, at a legacy-laden 150 years, is the oldest of our eight finalists by a range of 25 to 142 years. It bears the title of the second-oldest family-owned brewery in the United States and the oldest in Minnesota, and began, not surprisingly, in a quest for the perfect beer; specifically, the good-old-fashioned German-style beer adored by the brewery's founder, German immigrant August Schell.

Like most companies that have survived the passing of 15 decades, the road wasn't always a smooth one.

"Our organization has endured the Civil War, the Dakota Conflict, the Great Depression, two world wars, and several economic crises," says Schell's CEO and president Ted Marti, who took over from his father, Warren, in 1986.

Not to mention the 13-year "dry" spell and a havoc-wreaking event that nearly shuttered the brewery for one year when, in 1923, two federal agents raided the place and claimed the .5 percent alcohol by volume rate had been exceeded; eight months later the charges were dropped and Schell's was cleared of any wrongdoing. "That was a tough time for the brewery," says Ted, explaining the business stayed afloat by producing "near beer," root beer and selling candy. "Prohibition didn't go over very well with the Germans."

What has gone over well is the careful, thoughtful guidance of Ted Marti. There was the shifting focus from the premium beers to the specialty and craft beers, the acquisition of the Grain Belt brand in 2002 and investment in faster brewing equipment for increased capacity.

"I've always wanted the business to grow slow and steady; to stay small, but be profitable," says Ted. "And I've never forgotten those who were here before me."

FAMILY BIZBRIEFING

  • Family Name: Schell/Marti
  • Principal Owner: Ted Marti
  • Number of Employees: 49 full time; 19 part time
  • Number of Family Employed by Business: 3
  • Number of Family Involved with Business: 5, plus those on the board of directors
  • Number of Generations Involved Since Inception: 6
  • Generation Currently Running the Business: 5th
  • Active Board: Yes
  • Family on Board: All family

BIZBRIEFING: Headquarters: New Ulm / Inception: 1860 / Type of Ownership: C-Corp / Description: Schell's Brewery is the second-oldest family-owned brewery in the United States and the oldest brewery in Minnesota. / Website: schellsbrewery.com


 

Bachman's - Legacy Award Winner

When German-born Henry Bachman and his bride, Hattie, first planted the long, tidy rows of potatoes, squash, onions and lettuce on a slip of rich farmland in 1885 near what is now Lyndale Avenue, sure, they did it to bring in some money to provide for their growing family (there would be five sons and three daughters). But there was also a larger, more profound purpose in mind.

"Henry Sr. had the belief that a family should always stay together," says Dale Bachman, CEO and Henry's great-grandson. "The family business was the surest way to achieve that."

It was that desire to have the family immersed in the business that would seal the deal for their success. Each of the boys was given a bench in the greenhouse to grow whatever struck his fancy; Albert-son No. 5-opted for flowers.

"He acquired the love of flowers from his mother, Hattie, and he studied the stacks of Florist Review magazines she had up in the attic," says Dale.

Carnations were Albert's flora of choice, of which he sold hand-tied bunches at the Oak Hill Cemetery across the street. In relatively short order, with a prolific carnation house on premises that fed an increasing consumer demand for fresh-cut blooms, there was more revenue from that bench of flowers than from an entire greenhouse full of vegetables; a new business direction was born.

This direction was propelled with the opening of their first retail store in 1927, and has continued over the ensuing decades with 27 subsequent shops-including 21 floral marts inside local Lunds and Byerly's grocery stores, a wholly new approach for the industry-the implementation and sale of a successful wholesale gift subsidiary, a rebranding, changes in leadership a few times over, and the creation of one of the most iconic brands in Minnesota.

 "For 125 years we have had a commitment to horticulture and production at our core," says Dale. "We have all learned the value of hard work and dedication, and the importance of running our business with integrity and honesty. I think all of us here really do bleed purple."

FAMILY BIZBRIEFING

  • Family Name: Bachman
  • Principal Owners: 34 fourth- and fifth-generation family members
  • Number of Employees: 1,300 at peak (May); 825 at off-peak (January)
  • Number of Family Employed by Business: 4 (two fourth generation and two fifth generation)
  • Number of Generations Involved Since Inception: 5
  • Generation Currently Running the Business: 4th & 5th
  • Active Board: Yes
  • Family on Board: Dale Bachman, Paul Bachman, Susan Bachman-West, Lee Bachman, Alan Bachman, Linda Bachman Felker

BIZBRIEFING Headquarters: Minneapolis / Inception: 1885 / Type of Ownership: C-Corp / Description: Bachman's provides homes and businesses with a variety of horticultural-related products and services. / Website: bachmans.com

 


 

Murphy Warehouse Company - Legacy Award Winner

If taglines are meant to encapsulate a business in eight words or less, well, Murphy Warehouse's new tagline idea they've been kicking around does the job pretty darn well. "It goes like this: ‘We're not just another frickin' warehouse company,'" Richard Murphy Jr., president, CEO and fourth-generation Murphy to run the 106-year-old business, says with a chuckle, before adding, "It's still up in the air."

This unique warehouse legacy began when Edward L. Murphy, local politician and entrepreneur, bought two horses and a wagon (also the name of the book about the company) and put his scrappy, 16-year-old son, Edward L. Murphy Jr., to work moving cargo off the paddleboats in St. Paul; shortly thereafter, Murphy Warehouse was instrumental in hauling the massive amounts of building materials used for the new state capitol building.

Over the next 10 decades and some change, there have been some boom times and some bust times, to be sure. But that's not really what makes them unique. Richard, who worked as a landscape architect before joining the family business and still teaches a class at the University of Minnesota each year, imbues skills garnered in that role-what he calls his "out-of-the-box-thinking"-into his current role at Murphy.

For example, in an effort to make his potential customers remember the company, Richard has turned his office and vestibule area into a "Rock and Roll Hall of Fame," with a gallery of memorabilia featuring the Beatles, the Rolling Stones, Bob Dylan and other legends. "It gets a conversation going," says Richard, "and it helps us stand out from the pile."

There is also the environmental sustainability component-which sparked a visit from Mayor Rybak on Earth Day 2009-a company culture that has created a close-to-zero employee turnover, the fact that there have been no stock battles or control issues among the family in charge, and the truism that Murphy Warehouse is considered an exemplar in the logistics services industry. Not to mention they're a giving group as well.

"We're really not just another warehouse company," says Richard.

FAMILY BIZBRIEFING

  • Family Name: Murphy
  • Principal Owners: 34 family shareholders
  • Number of Employees: 165
  • Number of Family Employed by Business: 2
  • Number of Family Members Involved with Business: 5
  • Number of Generations Involved Since Inception: 5
  • Generation Currently Running the Business: 4th
  • Active Board: Yes
  • Family on Board: Two fourth- and two fifth-generations

BIZBRIEFING Headquarters: Minneapolis / Inception: 1904 / Type of Ownership: Sub-S / Description: Murphy Warehouse is a supply chain logistics provider. / Website: murphywarehouse.com

 


 

Coborn's Incorporated - Special Recognition: Community Service and Philanthropy

Many companies have mottos they hang their hats on, carefully crafted words touting this virtue or that philosophy by which they claim to operate. St. Cloud-based Coborn's doesn't just give lip service to what they call their "Golden Rule," they truly embody it.

"Treat all with dignity and respect" is their philosophy, and one that was first put into play in 1921 when company founder Chester Coborn opened a small produce market on Broadway Avenue in the river town of Sauk Rapids.

"From Chester Coborn's first store in Sauk Rapids with a handful of employees, to our present-day company with more than 6,700 employees, we consider them all part of the Coborn family and legacy," says Chris Coborn, president and CEO, who started out bagging groceries and now oversees the employee-owned organization that includes 39 grocery stores, convenience stores, liquor stores, pharmacies, a central bakery, dry cleaning facility, central commissary, its own grocery distribution center and CobornsDelivers, the online grocery service.

Besides treating employees with the utmost regard, Coborn's reaches out to its customers and the communities it serves. With an emphasis on local non-profit organizations helping youths in need, specifically local food shelves and cancer research, each year the company donates $2.5 million and thousands of volunteer hours ensuring these programs are continued.

And that's just for starters.

The Coborn family has donated $3 million to the Coborn Cancer Center in St. Cloud, has donated and helped raise millions for the Boy Scouts of America, and several family members serve as volunteers on the boards of non-profit organizations. Additionally, Coborn's is a corporate Leader in Giving for the United Way, and has implemented programs whereby groups can raise funds through special promotions and sales.

Not surprisingly, with all they do, their penchant for philanthropy is renowned in the state and the Midwest, and was recognized nationally when, in 1999, George magazine dubbed them "One of the 10 Most Generous Companies in America" from a cache of 400 nominees.

But to Chris Coborn it's just how they roll.

 "As a business and family," says Coborn, "we consider it essential to give back to the communities we serve."

FAMILY BIZBRIEFING

  • Family Name: Coborn
  • Principal Owners: Chris Coborn, Dan Coborn, Mark Coborn, Shelly Coborn, Julie Coborn
  • Number of Employees: 6,700
  • Number of Family Employed by Business: 7
  • Number of Generations Involved Since Inception: 4
  • Generation Currently Running the Business: 4th
  • Active Board: Yes
  • Family on Board: 3

BIZBRIEFING  Business Name: Coborn's Incorporated / Headquarters: St. Cloud / Inception: 1921 / Type of Ownership: Family and ESOP / Description: Coborn's Inc. owns and operates 39 grocery stores in the Upper Midwest, in addition to convenience, liquor, video stores and pharmacies. Coborn's also operates a central bakery, central dry cleaning facility, central commissary, long-term care pharmacy, its own grocery distribution center, and CobornsDelivers. / Website: coborns.com

 


 

Western Bank - Special Recognition: Economic Development

In 1935, when the country was in the depths of the effects of the Great Depression, Arthur William Sands-a farm boy from the tiny burg of Alvarado, Minn., one of 12 children, and with an eighth-grade education-purchased the struggling Western Bank on St. Paul's University Avenue with help from his family and friends; he had made his way to the city via a bank examiner job.

"Arthur Sands wanted to create a main-street bank, a community bank, much like the one he had in his hometown," says Julie Sands Causey, who joined the Western Bank board in 1999 and succeeded her uncle, Bill Sands, as chairman of the bank in 2004. "He had a very straightforward vision that University Avenue needed it."

Bill Sands, Arthur's son, recognizing that inner-city neighborhoods were in dire need of revitalization, expanded his dad's community-minded vision during his tenure at the helm of Western Bank by creating Western Initiatives for Neighborhood Development (WIND), a subsidiary of the bank that provides loans, real estate development, and strategic planning to small organizations. A few years later he added Neighborhood Development Center, another economic development organization designed to help emerging entrepreneurs gain the training and technical assistance required to get a business up and running, and keep them running. Bill also increased the geographic scope of the vision by expanding to five Twin Cities locations.

"We have always had a strong commitment to have our community grow with us," says Julie, who, on this day, spent much of it redesigning jobs for a small inner-city company in her work with Twin Cities Local Initiative Support Corporation, an organization that helps distressed neighborhoods become sustainable. "I am clearly a better banker for having done that."

Western Bank, under Julie's careful guidance, has flourished with the addition of sophisticated new technologies, but has retained that original purpose.  

"The heart and soul piece is that the work we do here is really impactful," says Julie. "We help companies survive longer and become more financially viable, and when that happens, we are maximizing our stakeholders' value, which, in turn, helps our customers, our communities and helps us; it all works together."

FAMILY BIZBRIEFING

  • Family Name: Sands
  • Principal Owners: Bill and Susan Sands, Bob Sands, Julie Sands Causey
  • Number of Employees: 80
  • Number of Family Employed by Business: 1
  • Number of Family Involved with Business: 4
  • Number of Generations Involved Since Inception: 4
  • Generation Currently Running the Business: 3rd + 2nd
  • Active Board: Yes
  • Family on Board: Bank board, 2; holding company board, 4

BIZBRIEFING Headquarters: St. Paul / Inception: 1915 / Type of Ownership: S-Corp / Description: Western Bank is an independent community bank with five geographically dispersed locations that serve business, nonprofit and consumer customers throughout the Twin Cities area. / Website: western-bank.com

 


 

Warners' Stellian - Emerging Award Winner

"When people ask me how we made it through the tough times of late, I tell them we did two things really well," says Jeff Warner, president of Warners' Stellian. "The first thing we did was to keep the culture of our company healthy-we had to make some personal sacrifices to do that, but we kept the Christmas parties, the picnics, the health initiatives, the pay; and the second thing was we had to work harder. We did it all because it was the right thing to do."

Jeff is not hesitant about sharing where he learned this "do-the-right-thing" philosophy: his dad.

Jim Warner Sr., a hard-working, lead-by-example, soft-spoken guy, bought the St. Paul appliance store, Stellians, in 1971 with his nephew after having worked there for 16 years. It was a family affair from the get-go and Jeff remembers all of his eight siblings and himself plastering the neighborhoods with flyers. "It was grass-roots marketing at its best," says Jeff.

Over the ensuing years, Jim Sr. bought out his nephew's share, the product mix expanded, sales increased and in 1987, with the newly acquired Richfield Appliance, revenue was at $4 million.

When Jim Sr. officially retired in 2000, revenue had jumped to nearly $40 million, and there were four locations. But, as it turns out, the real legacy is the path he had trod for his children.

"My dad showed us the value of treating your customers well, of making sure your employees are well taken-care-of, and the importance of giving back; he always took care of his people," says Jeff. "And right before he retired, he took the time to evaluate each of our skills and placed us each in a role he thought would be the best for the business."

Last year, Warners' Stellian donated 10 percent of its net profits to the community, continued with their excellent customer service and free delivery program and, moving forward, are close to setting up a foundation.

"Now we are the ones leading by example," says Jeff. "So when the next generation takes over, they'll know which principles to follow."

FAMILY BIZBRIEFING

  • Family Name: Warner
  • Principal Owners: 9 Warner siblings
  • Number of Employees: 200
  • Number of Family Employed by Business: 30
  • Number of Family Involved with Business: 72 (active and inactive)
  • Number of Generations Involved Since Inception: 3
  • Generation Currently Running the Business: 2nd
  • Active Board: Yes
  • Family on Board: Yes

BIZBRIEFING Headquarters: St. Paul / Inception: 1949 / Type of Ownership: S-Corp Description: Warners' Stellian is Minnesota's largest family-owned appliance seller. / Website: warnersstellian.com

 


 

Homes For Heroes - Special Recognition: Social Entrepreneurship

Often the most influential businesses begin with a single, thoughtful question, posited in the simplest of ways; such is the case for Homes for Heroes.

Having been transfixed with the selfless, courageous and harrowing feats the legions of New York City firefighters, law enforcement officers and first responders carried out in the days and weeks following the 9/11 tragedy, Mark Micek turned to his mother Ruth Johnson, who was a realtor, and asked, "Mom, are there any programs out there for those heroes to buy homes, to help them out?"

Turns out there wasn't. So Ruth gathered her sister, Helen, and her daughter, Kacy, who were also realtors, and together she and Mark shared their idea. "We all agreed then and there that it was the perfect way to give back," says Ruth, who is now the profit-with-a-purpose's CEO. "And a great business move as well; it was a win-win in our book."

They applied for the much-coveted Homes for Heroes registered trademark shortly thereafter-for which they spend a good deal of energy and resources fighting the numerous infringement cases-and spent the first year hitting the streets with their homemade marketing materials.

"I think we brought in $177,000 in gross commission that first year, and gave back $48,000 to the heroes," says Ruth. "It was a huge success."

Since its inception, Homes for Heroes has expanded its "hero" list to include educators, health care workers and military personnel and, not surprisingly, has grown in other ways as well. Their gross income from 2008 to 2009 increased 286 percent; year-to-date over the same period in 2009, they are looking at an increase of 221 percent. They currently have 169 realtor affiliates in 24 states, recently added Friends of Heroes-a listing of local service providers who offer discounts to the heroes-created the Homes for Heroes Foundation, are offering help with rent and are gearing up for a program that, in Ruth's words, "is going to be huge."

"We can't say for sure how many heroes we have helped because there are so many ways in which they can benefit, but our database is up to over 4,000," says Ruth proudly. "The more we can help, the more we smile."

FAMILY BIZBRIEFING

  • Family Name: Johnson
  • Principal Owners: Ruth Johnson, Helen Johnson, Kacy Mlenar, Mark Micek
  • Number of Employees: 14
  • Number of Family Employed by Business: 5
  • Number of Generations Involved Since Inception: 2
  • Generation Currently Running the Business: 1st
  • Active Board: Yes
  • Family on Board: 2

BIZBRIEFING Headquarters: Coon Rapids / Inception: 2002 / Type of Ownership: C-Corp / Description: Homes for Heroes affiliates with realtors, lenders, and other real estate-related service providers to offer significant discounts and rebates for military personnel, firefighters, law enforcement officers, teachers and health care workers. / Website: homesforheroes.com

 


 

Evolve Systems - Special Recognition: Commitment to the Entrepreneurial Family

When Marnie Ochs-Raleigh and Donald Raleigh first flexed their entrepreneurial muscle and started Transcomp (derived from TRANSlating COMPuters) in 1993, you could say, without too much of a stretch, it was in their blood; you see, each has at least four generations of entrepreneurial forebears who preceded them in taking an idea and putting in the copious amounts of hard work to bring those ideas to fruition. (Don and Marnie also took that risk-taking spirit to heart when, after just four hours of knowing each other, Don proposed and Marnie said ‘yes.' But that's another story.)

Transcomp, which was originally focused on selling computers to individual consumers, morphed into Evolve Systems in 2002 when, true to that self-starter mentality and nimbleness that has been passed down through the generations, Don and Marnie changed directions to meet what they saw was a burgeoning trend.

"We knew that websites were coming because the large companies were all getting them," says Don. "So we focused our energy on creating websites for the business marketplace, specifically small- to medium-size businesses, and giving our customers the tools they need to have them manage their own sites. Our idea is to not give our customers the fish, but to teach them how to fish."

Their strategy worked. Evolve Systems has experienced an impressive 30 percent growth over the past five years, boasts thousands of customers nationally and has technology partners as far away as Cyprus and Russia.

But their love of idea-generating, risk-taking, hard work, providing top-notch customer service to their customers, being community-conscious (they donate 5 percent of their corporate profits and countless volunteer hours back to the community) and a myriad of other qualities will not end with the first generation. In fact, the next generation of entrepreneurs is being readied.

"We have made entrepreneurship part of who we are as a family," says Marnie. "We don't just talk about it; we live it and encourage it by nurturing each idea our children have and breathing life into it. And through all of that we believe they understand the commitment and focus needed to be successful in the business world today."

FAMILY BIZBRIEFING:

  • Family Name: Raleigh, Ochs-Raleigh
  • Principal Owners: Marnie Ochs-Raleigh and Donald Raleigh
  • Number of Employees: 12
  • Number of Family Employed by Business: 2
  • Number of Family Involved with Business: 2
  • Number of Generations Involved Since Inception: 1
  • Generation Currently Running the Board: 1st
  • Active Board: Yes, advisory board and customer advisory board, but not a traditional board of directors
  • Family on Board: Donald Raleigh, Marnie Ochs-Raleigh, Gregory Ochs

BIZBRIEFINGING Headquarters: Roseville / Inception: 1993 / Type of Ownership: S-Corp / Description: Evolve Systems provides self-managed websites and credit card merchant services to clients in national and international markets. / Website: evolve-systems.com