6 Ways This Family Business Has Survived Since the Civil War

You can't make a company last six generations by forcing the business on your children.
July 02, 2012

According to the Small Business Administration, 90 percent of small businesses are family-owned, yet at any give time, 40 percent are at risk of failing. Even big, wealthy family-owned firms have trouble carrying on. Only 15 percent of businesses with interests valued at at least $300 million succeed past the second generation, according to a study by Prince & Associates, Inc. and Campden Research.

Stephen Hillenmeyer is a fifth generation businessman at Hillenmeyer Landscaping and is walking proof that statistics can be beaten. Twenty years before the Civil War began, Francis Hillenmeyer founded Hillenmeyer Landscaping Services and today that business is still going strong. When the time is right, Stephen's son Chase will take over, marking the sixth generation.

Here are six tips Hillenmeyer provided to help your family business last just as long:

1. Don't force your child to join the family business. No one likes being told what to do. Furthermore, if your child is not as passionate about the business as you are, you're heading towards disaster. Don't assume that the business will grow on them.

Stephen was not forced to join the family business, nor did he force either of his sons. "When I was growing up, being in the business felt right to me. I encouraged both my sons to go out there and try other things. My older son graduated college and now he does wealth management in Chicago. That's fine with me. My younger son, Chase, made the decision to join on his own. Unlike myself, who majored in horticulture, I encouraged Chase to major in business. Horticulture is a closed field—very specific. It can be learned on the job. But business opens many doors. This way, if he changed his mind, he had many other options. Family businesses should want the same for their children."

2. Learn how to deal with family disputes—especially when it involves money. "I was the youngest of nine siblings. We definitely had our issues. For example, if someone has been working with the company for five years, and then another family member joins, should they be paid the same? If two people have been working for the same amount of time, but one puts way more effort into the job while the other slacks off, should they both have the same equity in the business?"

Research conducted by the SBA suggests that the person in charge of the business maintain a no-play attitude when it comes to the company. "The leader of the family business must not take sides with any member of the family, but rather must demonstrate that disagreements will not be permitted to affect the business."

3. Maintain your core principles. "Technology may change, and the way we do business may change, but we stand by the old principles we were founded upon," Stephen says. If the founding customer service model and tactics worked beyond the first generation, something is being done right. "We believe in complete honesty, integrity, fairness and that the customer is always right."

4. Expand your business. As a family business (or any business), you always want to be growing. In addition to the services provided by Hillenmeyer Landscaping, Stephen decided to purchase a Weed Man franchise. With the family's extensive knowledge in the lawn care industry, they were able to take advantage of the Weed Man opportunities.

"I converted all of our commercial and residential accounts into Weed Man," Stephen says. "It was a great venture for me. They provided me with the knowledge, support and independent purchasing power. Since purchasing Weed Man, our business has grown 10 times more than it was 10 years ago."

5. Pay them for the work. A common mistake among family businesses is to think that, while their children are young, they can take advantage of free labor. This isn't the case. By paying them for their work, you're giving them an incentive and drive to do better.

"When I was ten, I started pulling wild onions for ten cents an hour," Stephen says. "I worked during the summer for about twenty hours a week and more as I got into high school. But it all happened very naturally. I just fell into it and enjoyed it."

6. Prepare your company for the future. By leaving the fate of the business in the hands of the next person, you're increasing the chances of failing, Stephen says.

"It's your company, so you need to decide how you want it to be when you're not around. It's important to make sure who is going to run the company and how it is going to be run. Don't put it on your kids to make those decisions, because that's when there's going to be hurt feelings. If I decided early on that one kid gets one thing and one kid gets another, they might be mad, but that's how it is. Communicate with your children about your future plans and make sure they know what is happening and why."

Do you see yourself passing along your small business to your children?

Photo credit: Courtesy subject