Monday, January 28, 2013


There are many successful multi-generational family businesses operating in Humboldt County, California. Some go back five generations, to the spring of 1850 when droves of folks, mostly men, began arriving in Humboldt Bay from all across the country and Europe. The newcomers came seeking gold in the nearby rivers. Most found nothing of course and quickly shifted their focus to the exploitation of more readily available resources, namely timber, salmon and raw land. From the chaos of that transition sprang new business opportunities, some which continue to prosper today. The newcomers saw needs to fill and problems to solve. Necessity truly is the mother of invention.

The family owned and operated businesses in our region, the stewardship of which has been handed down from one generation to the next, have survived all sorts of tumultuous times and events including earthquakes, floods, fires, recessions and severe depressions.

I interviewed the owners of nine local family businesses. I asked about the following issues: How do familial relationships affect the success or the failure of your business. What issues are special and peculiar to businesses run by family members? How smoothly did the current generation of management take the reins of power from the previous? What are some big problems that have confronting your enterprise in the past and how were they overcome? Is your management style markedly different from the previous operators, and if so, how? To ensure long term survival, what changes are under development? What key lessons did you learn from the previous generation? What were you not taught, but wish you had been? And what about the succession plan, bringing on the next generation, how’s that going?

I also asked about the Great Recession, you know that bad stretch that began in late 2007 or so and continues to this day. I asked questions like the following: What strategies are you using to cope with the recession? Have you had to redirect your marketing, and if so, how? Have you taken steps to get closer to your existing customers? Have you let people go, delayed new hiring? Have you lowered your expectations? What does the next year or so look like? And one last question, what’s your secret of success?

I’m happy to report that the operators of the family businesses I spoke to in Humboldt County are doing great. They are thriving, even in the recession. Much of this is because of the strength of the reservoir of family business experience.

Here’s the unique thing. There is a clear priceless family business advantage. Practically all the input the current generation might need to weather any sort of storm or to expand and grow more and more prosperous comes from the knowledge of previous generations in the family. Resting amid all that history is a vast repository of experience, wisdom, strong financial resources, plus a genuine willingness to pitch in and solve problems and of course, a compelling intention to keep the business moving forward and ensure a smooth transition to the next generation.

Growing up the sons and daughters had a unique business experience. The activities of the family enterprise were to topic of conversation at the dinner table for years. Many of the young had the opportunity to intern in the business during the summer months and after school during their teenage years, always learning at the feet of their parents. This stuff rubs off.

My father was a psychiatrist. I’m a psychologist. The business of mental health was the topic of discussion at our dinner table and I worked in my father’s office after school and during the summers doing laboratory work for him. It was a fun place for a nimble and impressionable mind to be. I’m sure my interest in the mental health of individuals and businesses was hugely influenced by my personal family business experience.

It’s true, the former generations of family business operators have seen just about everything there is to see and have had to come up with responses to all sort of crises and serious problems. Their bank of relevant experience is vast. They built their family business and know how it works. When the new generation faces a prickly problem the elders are more than willing to step in and share experiences and resources, even financial resources. They are genetically predispositioned and incentivized to do so because they are family. Input to the current generation in charge flow from the parents and grandparents and other relatives like a wide open faucet.

Let’s face this fact. It’s much easier to ask a family member, who understands and cares, for a loan when you've got a cash flow problem than it is to go to the bank. And the bank might say no. The relatives want what they built and managed to continue to flourish. They’re not going to hold back. So should the business need an infusion of capital they are likely to pitch with loans.

Now about the Great Recession: Members of the previous generation have weathered recessions before and their input has steered the current generation toward the development and implementation of successful recession coping strategies. These include the obvious notions: Get real close to current customers and clients. Learn their names. Get involved in community activities to be clearly visible. Postpone big purchases. Tighten up on inventory. Hold back on hiring. Cut costs to the bone. Reinvent and experiment with innovative marketing and sales and advertising modalities. Be hands on everywhere. Utilize free media such as Facebook. Be a cheerleader. Waste no time or effort. Manage stress by solving the problems that can be solved. Refocus and clarify the mission. And since there are family members in the business, sometimes several of them, resolve any personal messes in those key relationships. Keep those Thanksgiving dinners about the turkey, not about the business issues. Those can wait until Monday.

The business world everywhere is dominated by family businesses. One huge advantage is that they focus on long-term sustainability, community support and survival. Answering the question of how they survive intact and how families can maintain family unity over hundreds of years is essential. The family businesses that don’t survive the transfer of management from one generation to the next often point to unresolvable relationship conflicts as a big failure factor. I did not see any of that in my interviews. The folks I spoke with have figured it out. They do family business right.

Every one of the family owned business operators I spoke with loves being in their family business. They try to treat their employees like family too. They wouldn't have it any other way.

Humboldt County as a business community and as a society can feel secure in the fact that many family businesses play a major role in our economy and are here to stay. As we go forward, new history will tell us how the next five generations turn out. That will be for another writer to contemplate.

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