Carrying On

REVIEW SUMMARY
Company. Wynn Companies
Trend. Succession planning
Key. Family businesses that promote based on ability and talent have a better chance of survival.

A few years ago, Katie Wynn applied for a management position at the Naples hardware-store company owned by her family.

With the same last name, you'd think the third-generation Wynn would be a shoo-in for the job. Instead, the plum assignment went to a non-family member who was better qualified.

The anecdote is an illustration of how the Wynn family businesses have thrived for so long in Naples. The Wynns own and operate businesses ranging from hardware and grocery stores to commercial real estate that generated revenues of about $44 million in 2009.

The Wynn family enterprise is unusual in that it has grown and prospered well past its founding in 1938. The five owners of the second generation who each own 20% of the companies are now considering how to pass them to the 20-member third generation, most of whom aren't involved in the day-to-day operations.

Fact is, most family businesses don't survive the second generation and even fewer reach the third generation. That's what makes the Wynn family businesses so unusual. But speak to some of the Wynns and you start to get a picture of what drives their success.

For starters, Wynns who are involved in the business today started bagging groceries or stuffing envelopes at an early age, working their way up from the bottom rungs in their teens. That created a certain work ethic that prevented any culture of entitlement or nepotism from creeping into the organization.

Each of the five owners is involved in a different part of the business. That's important because it keeps them from micromanaging each other and bickering.

The Wynns work hard but also emphasize having fun as a family and that keeps them talking to each other. The 40-member extended family recently sailed on a cruise together.

The second generation has identified and nurtured three talented individuals in the third generation who are capable of leading the company one day. That's important because the five Wynns in the second generation are within a decade of retiring.

What's in a name?

Katie Wynn was 14 years old when she started folding statements for her family's Sunshine Ace Hardware stores. “Then I worked on the floor, straightening up and sweeping,” she recalls.

After college, Katie Wynn rejoined the company and worked through all the departments of the hardware store before deciding to apply for a manager position. She never expected to get the job because she knew the business was a meritocracy.

“It's always a matter of who's going to be the best for the position,” says the 25-year-old who is now assistant to the director of operation for the company's six Sunshine Ace hardware stores.

After she was passed over by a better-qualified non-family member, Katie Wynn wasn't bitter. “I knew there were other people who were more qualified, but it made perfectly clear (to management) that I wanted to get the manager experience,” she recalls.

That's been the method the five current owners of the Wynn companies to identify talent and desire in the 20-member third generation. They themselves grew up in the business. “My first job was to burn boxes,” recalls Tim Wynn, president of Wynn's Family Market and Wynn's Catering and one of the five owners. That's before his now-deceased father, Don Wynn, replaced him with a trash compactor and promoted him to bag boy, he laughs.

Among those is third-generation 38-year-old Michael Wynn, who was appointed chairman of the board and chief financial officer. Like everyone else, Michael Wynn started at the bottom and one summer put in a 105-hour week at the grocery store when he was a teenager. “There wasn't a lot handed out,” he recalls. “There are endless things to do in the grocery business.”

Minding your business

With several different businesses to manage, from grocery and hardware stores to catering and commercial-property management, the five Wynn heirs of the second generation are each busy running one part of the empire.

“I was in the grocery business until I retired at 14 and ended up in hardware,” jokes Jerry Wynn. “Then my older brother got into real estate. It kept us apart. Everyone had their own job in a different entity.”

Patriarch Don Wynn foresaw the need to establish different businesses to grow and keep the family peace. “My dad was smart enough to diversify so we're not on top of each other,” says Tim Wynn. “You're not everyday in there telling me where to put the can of beans or why isn't that cashier smiling.”

Don Wynn's management style wasn't overbearing. “The good part was Dad was smart enough to know that he had to allow the next generation to start taking over or he'd not retire. He kept quiet and let us make our own mistakes,” says Jerry Wynn. Now, he and his siblings are starting to turn over management to the next generation, including Michael Wynn.

At Michael Wynn's direction, the heirs meet regularly once a month to discuss the overall strategy and bounce ideas off each other. At his urging, the five heirs have instituted corporate guidelines to give the company structure that so many family businesses lack.

“Everybody stayed so busy there wasn't structure,” Michael Wynn says. For example, until a few years ago there was no human-resource department or job description despite the fact that the companies have more than 400 employees combined.

The second generation recognized the need to establish a structure, especially in light of their retirement one day. “We have to have some type of corporate structure that keeps everyone running at the same pace,” says Jerry Wynn. “You can't let each store run off on its own. Two will be profitable and four won't.”

It hasn't been easy. “I will fight corporate structure all day long, but I accept some of it,” Jerry Wynn says.

Fishing on Shark River

Tim Wynn took over his father's tradition of taking family members on fishing trips on the Shark River in the Everglades. “I like it because I get to go fishing,” he laughs.

But there's a serious side to the fun. “It gives everybody a chance to get together and enjoy time outside of work. The nice thing about it is cell phones don't work there,” Tim Wynn says.

Family bonds are critical to the success, it seems. “There was never a Christmas or holiday that we didn't get together,” says Jerry Wynn.

The recession has made those bonds stronger, says Michael Wynn. “If anything, it's helped to bring everybody closer. Everyone has stepped up,” he says.

Every five years, the 40-plus members of the Wynn family take a cruise on a large ship. This year, the family sailed on the Oasis of the Seas, one of the largest Royal Caribbean cruise ships.

Retirement plans

Don Wynn subsidized his retirement by selling some of the grocery stores he owned, but the second generation doesn't want to sell any assets. “We've got to support the next generation so they can support us,” says Jerry Wynn.

The second Wynn generation, who each own 20% of the company, are about 10 years away from all retiring. Just three members of the 20-member third generation are involved in the business, which presents its own challenges.

“I think we'll have nonvoting stock,” says Tim Wynn. The three members of the third generation involved in the business —Michael Wynn, Katie Wynn and Jeff Wynn— may get voting stock that allows only them to make operational decisions. “That's the only way it's going to work. It's hard enough with five people,” says Tim Wynn.

“The hardest part is letting go and allowing that next generation to step in,” says Jerry Wynn. He's thinking about giving away stock to the next generation, selling it to them or a combination of the two. “As we move through, we'll have controlling partners who run the business,” he says.

If the company keeps paying dividends to stockholders, that cash could be the way for the third generation to finance the acquisition of stock from the second generation.

Succession planning hasn't been a big part of the family conversation yet. “I can honestly say that I don't have a clear understanding of how the ownership works right now,” says Katie Wynn. “I'm sure they have a plan, but it's nothing they've shared with me.”

For their part, the third generation knows that selling the company is a nonstarter. “This is a piece of their family history,” says Michael Wynn.

Meet the ¬¬¬owners

Don Wynn, who died in 2007 at age 85, passed his business to his five children when he retired in 1985. They include Larry Wynn, president of Wynn Properties; Thomas Wynn, vice president of Wynn Properties; Jerry Wynn, CEO of Sunshine Ace Hardware; Tim Wynn, president of Wynn's Family Market and Wynn's Catering; and Linda Wynn Smith, corporate secretary and treasurer.