Copyright 2004 San Antonio Express-News
San Antonio Express-News (Texas)
October 30, 2004, Saturday , METRO
SECTION: BUSINESS EXPRESS; COVER STORY ; Pg. 10H
LENGTH: 1942 words
HEADLINE: COVER STORY ; The family way ; Turning a small family business into a big corporation requires work, trust and planning for the future.
BYLINE: Analisa Nazareno
BODY: Starting off with a ninth-grade education and a $150 loan from his aunt and uncle, Pedro "Pete" Cortez built a multimillion-dollar restaurant enterprise and revitalized a blighted part of downtown San Antonio that is now one of the most coveted corners of real estate in the city.
When visitors throughout the world come to San Antonio, they're likely to stop off at one of the three restaurants he founded, Mi Tierra Cafe, La Margarita and Pico de Gallo. When they're shopping for souvenirs, they're likely to spend some money at El Mercado, or the Market Square, which he bought and redeveloped during the 1960s and 1970s.
When he died suddenly in 1984 at the age of 66, leaving a wife, five children, 22 grandchildren and more than 500 employees behind, the family business could have tattered into pieces like so many others.
But with good advice and succession planning, Cortez's wife, Cruz Cortez, divested the ownership shares she had inherited and divided them evenly among her children, Manuel, George, David, Rosalinda and Ruben.
First-born Manuel Cortez, died in 1995 at age 54, leaving his shares with his wife and children. Manuel's eldest son, Michael, 36, represents the family in board meetings.
Today, the business is a sophisticated family corporation - MTC Inc. - with professional advisory board members counseling the five principal family shareholders.
The family corporation has a strategic plan that includes growth and expansion into the city's North Side. And a succession plan for the third generation is already in place.
"He was very conscious (of the need for succession) and that's when he hired Oscar Mascorro, who is a CPA, because he wanted to start seeing on how to pass on the business," said George Cortez, the eldest of the siblings.
"So I think that his experience of serving on different boards made him aware that he wanted to be sure that everything would go properly," George Cortez said. "Of course he passed very suddenly, so it kind of fell on my mother's lap."
Quite often when the charismatic leader of a family business dies, heirs are unprepared to take the helm because a plan for succession - how ownership shares will be passed along, what management positioning will look like, and a strategic business plan - is not in place.
"People don't want to talk about some of these tough issues," said Morrison Woods, director for the Small Business Development Center at the University of Texas San Antonio. "It's not an easy thing to sit down and say 'You play an important role in the company, but you're not the one who should be leading it in the future.'
"It's a real psychological challenge to go through that, which is why a lot of this should be planned years in advance. But it's easy to put off."
Because succession planning involves a discussion of death and taxes, two of the more unpleasant business topics, many family business owners avoid such planning altogether, thinking a will and life insurance is sufficient.
"Succession planning should be a part of a strategic plan," said Ira Bryck, director of the University of Massachusetts Family Business Center in Amherst. "Succession is part of what happens to any company and people should take time out to discuss how the business will look like in six months, in three years, after the current CEO has passed."
Of the 22 million businesses in the United States, 90 percent are family controlled, according to Bryck. Of all family businesses, two out of three fail to make it to the second generation. And by the time a business is passed along to the fourth generation, it has a 1 in 1,000 chance of family members still being actively involved.
Part of the failure of family businesses to thrive into succeeding generations, Bryck said, is the failure of the preceding generation to take time to devise a succession plan, divest ownership shares in the company and relinquish control of the business while still alive.
Bryck said grooming the next generation of leaders is one of the biggest steps in succession planning. In the Cortez family, grooming has traditionally started at an early age.
"We grew up in the family business," said David Cortez, who started working in the family business at age 10. "Our father wanted to keep us busy and out of trouble. I wanted to come to work because my brothers were working. Manuel was working and George was working. The business was a lot smaller back then and we saw the sacrifices that he made and the growth of the business."
All the siblings worked in the family business. Many of the grandchildren also grew up working - at least during the summers - in the family business.
With this family, it wasn't a question of whether any of the potential successors had the talent or knowledge to run the family business.
"We all went to college and we all decided to stay with our father because of his vision and his love for the community," George Cortez said.
The question for this family was how it should be divided among the siblings and who should lead the business in the day-to-day operations.
Before the elder Cortez's death, he had established a corporation that ran his restaurant and real estate companies, and consulted his children and wife on business decisions. He was the CEO and president of the company.
That quasi-corporate board structure made division of the family business somewhat easier after he passed, although that didn't mean there weren't some problems along the way.
After eldest sibling Manuel Cortez died, the family argued as to who should retain his shares and voting power. At the time, it was a crisis that involved lawsuits and legal counterclaims that threatened to tear the family apart.
"I think as time went on, we learned that each one of us has different strengths. And we learned how to respect each other's different strengths," said Ruben Cortez, 44.
"It's a family business and there are dynamics. But as long as there is love in the family, and that is a big part of our lives here - the love that we have for our father and mother and just the passion that we have for the business," he said. "Our parents planted a seed in each one of us. And even though we may all be different, we all want the same thing."
The San Antonio Express-News owns the copyright to this story. For a full copy of this story, e-mail Analisa and she will send you a clip via e-mail or snail mail.
San Antonio Express-News (Texas)
October 30, 2004, Saturday , METRO
SECTION: BUSINESS EXPRESS; COVER STORY ; Pg. 10H
LENGTH: 1942 words
HEADLINE: COVER STORY ; The family way ; Turning a small family business into a big corporation requires work, trust and planning for the future.
BYLINE: Analisa Nazareno
BODY: Starting off with a ninth-grade education and a $150 loan from his aunt and uncle, Pedro "Pete" Cortez built a multimillion-dollar restaurant enterprise and revitalized a blighted part of downtown San Antonio that is now one of the most coveted corners of real estate in the city.
When visitors throughout the world come to San Antonio, they're likely to stop off at one of the three restaurants he founded, Mi Tierra Cafe, La Margarita and Pico de Gallo. When they're shopping for souvenirs, they're likely to spend some money at El Mercado, or the Market Square, which he bought and redeveloped during the 1960s and 1970s.
When he died suddenly in 1984 at the age of 66, leaving a wife, five children, 22 grandchildren and more than 500 employees behind, the family business could have tattered into pieces like so many others.
But with good advice and succession planning, Cortez's wife, Cruz Cortez, divested the ownership shares she had inherited and divided them evenly among her children, Manuel, George, David, Rosalinda and Ruben.
First-born Manuel Cortez, died in 1995 at age 54, leaving his shares with his wife and children. Manuel's eldest son, Michael, 36, represents the family in board meetings.
Today, the business is a sophisticated family corporation - MTC Inc. - with professional advisory board members counseling the five principal family shareholders.
The family corporation has a strategic plan that includes growth and expansion into the city's North Side. And a succession plan for the third generation is already in place.
"He was very conscious (of the need for succession) and that's when he hired Oscar Mascorro, who is a CPA, because he wanted to start seeing on how to pass on the business," said George Cortez, the eldest of the siblings.
"So I think that his experience of serving on different boards made him aware that he wanted to be sure that everything would go properly," George Cortez said. "Of course he passed very suddenly, so it kind of fell on my mother's lap."
Quite often when the charismatic leader of a family business dies, heirs are unprepared to take the helm because a plan for succession - how ownership shares will be passed along, what management positioning will look like, and a strategic business plan - is not in place.
"People don't want to talk about some of these tough issues," said Morrison Woods, director for the Small Business Development Center at the University of Texas San Antonio. "It's not an easy thing to sit down and say 'You play an important role in the company, but you're not the one who should be leading it in the future.'
"It's a real psychological challenge to go through that, which is why a lot of this should be planned years in advance. But it's easy to put off."
Because succession planning involves a discussion of death and taxes, two of the more unpleasant business topics, many family business owners avoid such planning altogether, thinking a will and life insurance is sufficient.
"Succession planning should be a part of a strategic plan," said Ira Bryck, director of the University of Massachusetts Family Business Center in Amherst. "Succession is part of what happens to any company and people should take time out to discuss how the business will look like in six months, in three years, after the current CEO has passed."
Of the 22 million businesses in the United States, 90 percent are family controlled, according to Bryck. Of all family businesses, two out of three fail to make it to the second generation. And by the time a business is passed along to the fourth generation, it has a 1 in 1,000 chance of family members still being actively involved.
Part of the failure of family businesses to thrive into succeeding generations, Bryck said, is the failure of the preceding generation to take time to devise a succession plan, divest ownership shares in the company and relinquish control of the business while still alive.
Bryck said grooming the next generation of leaders is one of the biggest steps in succession planning. In the Cortez family, grooming has traditionally started at an early age.
"We grew up in the family business," said David Cortez, who started working in the family business at age 10. "Our father wanted to keep us busy and out of trouble. I wanted to come to work because my brothers were working. Manuel was working and George was working. The business was a lot smaller back then and we saw the sacrifices that he made and the growth of the business."
All the siblings worked in the family business. Many of the grandchildren also grew up working - at least during the summers - in the family business.
With this family, it wasn't a question of whether any of the potential successors had the talent or knowledge to run the family business.
"We all went to college and we all decided to stay with our father because of his vision and his love for the community," George Cortez said.
The question for this family was how it should be divided among the siblings and who should lead the business in the day-to-day operations.
Before the elder Cortez's death, he had established a corporation that ran his restaurant and real estate companies, and consulted his children and wife on business decisions. He was the CEO and president of the company.
That quasi-corporate board structure made division of the family business somewhat easier after he passed, although that didn't mean there weren't some problems along the way.
After eldest sibling Manuel Cortez died, the family argued as to who should retain his shares and voting power. At the time, it was a crisis that involved lawsuits and legal counterclaims that threatened to tear the family apart.
"I think as time went on, we learned that each one of us has different strengths. And we learned how to respect each other's different strengths," said Ruben Cortez, 44.
"It's a family business and there are dynamics. But as long as there is love in the family, and that is a big part of our lives here - the love that we have for our father and mother and just the passion that we have for the business," he said. "Our parents planted a seed in each one of us. And even though we may all be different, we all want the same thing."
The San Antonio Express-News owns the copyright to this story. For a full copy of this story, e-mail Analisa and she will send you a clip via e-mail or snail mail.
