03/23/2012 09:26 am ET Updated Mar 23, 2012

Mitchell Kaneff, Arkay Packaging: He Fired His Father -- And Lived To Tell The Tale

Mitchell Kaneff remembers the first time he sat at his father's desk. He was 5. "I loved spending time with him but he worked six or seven days a week," Kaneff said. "I got to go with him to the office on Saturdays. That was my opportunity to see my dad." Little did he know that one day he'd grow up to take over the business -- and fire his own father.

Kaneff spent much of his working life at Hauppage, N.Y.-based Arkay Packaging, the folding carton company his grandfather started 90 years ago. At age 15, Kaneff started working on the crew line at the plant; after graduating from college in 1989, he joined the planning and sales team, and seven years later, his father promoted him to president.

But Kaneff found that leading the company wasn't easy with his father still on board. "His job was to help me and he was sabotaging me without realizing it," said Kaneff, also author of "Taking Over: Insider Tips from a Third Generation CEO." Kaneff revealed why asking his father to step down was the best thing he could do -- and why, surprisingly, it wasn't even the hardest thing he's had to do as a business owner.

How did you officially join the family business?

After college, I had two job offers in Germany, and was ready to leave the country. But it was a tough economic climate in 1990, and sales were horrendous. I asked my dad if there was anything I could do to help, and he said, "Yes, we need sales." I gave up that opportunity to work elsewhere. I couldn't stand leaving my dad at that time when things looked precarious in the company.

Things were difficult for years, not just with the economy and the business, but running the company with your father. What was the final straw that led you to fire him?

It wasn't really a firing -- I asked him to step down. My goal was to have him work as long as he wanted to, as a resource to help the company. But I'd been president for eight years, and that was eight years of dealing with one agreement broken after another about how we were going to run the business together. The last straw was when, on a business trip, I got a call from my COO, letting me know he was resigning from the company. I asked him to take a deep breath and tell me what happened. My father always has a plethora of ideas, and he grabbed this COO who had been with me for 30 years and asked him to take notes, which he didn't want to do at that point in his career. As soon as I hung up, I picked up the phone. I'm not a screamer, but I was definitely screaming at my dad. I said, "Either you can buy all the shares in the company back from me and I'm going to go do something else or basically you're out of here." Then on my way back to New York, I wrote him a letter and went to his apartment to hand it to him. I was crying because I was upset about it. I didn't know how he would react. And he got up and gave me a hug and said, "I'm proud of you. You're right. It's time." And he stepped down.

What did you write in the letter?

It was difficult for me to write. The letter was honoring him, respecting him as an industry legend, but I wanted to take the company in a different direction. I said the only way that's going to happen is if I'm leading and doing it all on my own. I said I need to right the ship, and effective immediately he would be the chairman emeritus and I would be the chairman and CEO. I ended the letter by thanking him for supporting me and my last line to him was that all great kings retire.

What is your relationship like with your father today?

He thanks me every day for giving him this opportunity, because his father died while working 18-hour days. and since then my dad has been traveling around the world and really enjoying his retirement. To this day, he's my best friend.

I came in with a different mindset of how I wanted to run the business. I have to honor everything he did to build the company. But we're in a much stronger psoition than we ever have been. I have to thank my team for that. They galvanized around me, though they could have done the opposite when he left.

Was asking your father to step down the hardest thing you've had to do as a business owner?

No, the hardest thing I actually had to do was shut down a factory and eliminate 60 jobs, including laying off some employees who had worked for the company for 30 years. That was a decision that had to be made for the survival of the company, but their lives were affected, and emotionally and mentally, that was the hardest thing I ever had to do.

I didn't "fire" my dad only to never talk to him again -- we've had an even stronger relationship since then. To this day, he's my best friend. And I knew it was also the right thing to do for the the people of the company, so they could get a clear and succinct message from a leader vs. getting on a football field and having two quarterbacks and not knowing who was going to call the play and who was throwing the ball.

Have you thought about what happens if your sons take over your company and have to fire you? Do you think it might be hard to let go yourself?

I have two sons, both 11 years old. I believe in finding hobbies so when your last day inevitably comes, you have other interests and venues to give you a sense of purpose. We all want to wake up with a sense of purpose, something that gets us out of bed in the morning, gets us juiced. I am in a rock band called The Young Presidents, and I've been enjoying doing keynote speeches, so those are two major things that take up my time. And if my sons were doing a good job and said, "Hey dad, it's time to go," I'd say, "Fantastic. Where's the door?" I agree it would definitely be hard, as a lot of identity is tied to running a business. But I won't be able to tell you until they fire me how it feels.

Entrepreneur Spotlight

Name: Mitchell S. Kaneff
Company: Arkay Packaging
Age: 45
Location: Hauppage, N.Y., with sales office in New York City and manufacturing plant in Roanoke, Va.
Founded: 1922
Employees: 200+
2012 Projected Revenue: $50 million