A Special Series from North American Wholesale Lumber Association
BY ANTHONY MUCK, DMSI SOFTWARE
There’s a well-known, yet grim, adage that “The first generation starts a business. The second generation runs it. And the third generation ruins it.” While this isn’t true in every case, research by the Family Firm Institute confirms that only 13% of family businesses succeed in their third generation.
A family business—just like any other business—can fail for a number of reasons, but there are unique challenges that family businesses must overcome to succeed. Conflicting opinions, resistance to change, sloppy transitions, and a lack of passionate leadership are common problems that often arise by the third generation.
Remarkably, Robbins Lumber Co. and Huff Lumber Co. have beaten the third-generation curse. Both companies are in their fifth generation of family ownership.
Motivated by Pride
Most people want to succeed in their jobs, but imagine the pressure of working in a business your family created and has sustained for decades. You wouldn’t want to let down your entire family tree. Alden Robbins, vice president and sales manager of Robbins Lumber, feels this pressure firsthand.
“If we make the wrong decisions, not only do I affect my job and life—and my employees’ jobs and lives—but I would have to look my children in the eye and let them know I blew their future and look my father and uncle and the eye and let them know I squandered their life’s work as well,” he says.
But more than the fear of failure, the leaders of successful multigenerational family companies are propelled by pride. At age 12, Troy Huff started working in the yard of his family’s business. Now he’s the sales manager at Huff Lumber and, more than anything, he just wants to see his company continue doing business.
“One of my big drives is I want this company to be around for as long as I’m alive,” he says. “I’m motivated by the idea of passing the business down onto the next generation. It’s a prideful factor.”
The Business of Relationships
Pride aside, if you can’t get along with the family members you work with, your business will likely suffer. Mark Huff, the owner of Huff Lumber and father of Troy Huff, doesn’t remember his father and grandfather disagreeing openly about the business, but he does recall certain differences in leadership style.
“My grandfather was old school,” he says. “His mantra was ‘This is my business, and I’m going to run it the way I want.’ He was pretty stern. When we decided to do engineered wood, I don’t think my father could have convinced my grandfather to do it, but I was able to convince him we needed to do it.”
When Troy graduated college and began working in the family company full time, Mark felt himself following his grandfather’s ideas about the business.
“I was falling into my grandfather’s steps, not so much running the business that way but in the sense of ‘This is the way we’ve always done it,’” Mark says. “My son got a business degree and I thought, you know what, just because this is the way we do things doesn’t mean it’s the best way. I encourage Troy to come to me with ideas and changes.”
Relationships within the family business are one thing; relationships with the people outside your business—your partners and customers—are a completely separate, and equally important, issue. People say all the time that industries like the wholesale lumber industry are “relationship businesses.” Is this still true in today’s digital world? According to both Huff Lumber and Robbins Lumber, absolutely.
Jim Robbins, retired owner and president of Robbins Lumber, says relationships are the key to any successful business—and they will continue to be that way. “I don’t want to sell someone a load of lumber. I want to be their regular supplier because of the relationship we have with them,” he says.
His son Alden agrees, and argues that relationships are more important than ever. “Consolidation has changed the face of the industry. Big boxes have changed the face of the industry. There are fewer mills and wholesalers playing their traditional, separate roles. In this environment, if a person needs to procure fiber, they need to have that relationship to even get a look at it, regardless of price. It isn’t always easy, but the relationship-driven facet of the business requires that you form bonds with your customers that go beyond your basic scope,” Alden Robbins says.
Mark Huff also emphasizes the importance of relationships, even in the age of increasingly present technology. “There are a lot of people out there that say the younger generations are trying to buy more things online. Because of what we do, it would be very difficult to transition our business into something you could go online and purchase because we are on the wholesale side of it. There may be some industries where internet purchasing works well, but I don’t see that happening in my line of business,” he says.
Eyes on the Future
Good relationships with customers are clearly still important, but multigenerational family businesses sometimes fail not because of poor relationships but because of a fear of change. Both Robbins Lumber and Huff Lumber see evolution of their businesses as an important aspect of success. Alden Robbins says their company knows it needs to be flexible and adapt to the times while keeping grounded in the company’s traditional areas of excellence of quality and customer service.
Despite being in retirement, Jim Robbins is enthusiastic about developing new products and markets. “What excites me is getting orders away from the competition because we can do something they can’t or we can service the account better,” he says.
As for Huff Lumber, both Mark and Troy Huff cite the process of implementing a new computer system for the office. This type of change might scare a leader who is stuck in their ways, but Huff Lumber is focused on improving its practices and keeping up with the times.
“There are a couple ideas that I may [suggest], but the one nice thing is [my dad] either trusts me or is willing to let me make my own mistakes, so I haven’t run into an issue where I come to an idea and he shuts me down,” Troy says.
There’s not much stopping a family business where every member is on the same page and willing to do what it takes to succeed.
– Anthony Muck is manager of customer support for DMSi, Omaha, Ne., and 2016 chairman of North American Wholesale Lumber Association’s marketing committee.