What does it take to successfully transfer your business to 2nd generation family member(s)? How about third generation and beyond? If it extends to 7 generations and you have a 100 year old business and you have succeeded in establishing a family dynasty. You have preserved family wealth. Sounds like an impossible feat considering that 70% of family-owned businesses fail or are sold before the second generation gets a chance to take over.
According to James E. Hughes, author of Family Wealth, it is possible with the right approach; include a spiritual component. I’m not necessarily talking about bringing the family to meditate deep in the Himalayas, although it sounds inviting to me, I’m talking about defining what the purpose of family is. For Mr. Hughes, family purpose is all about insuring the happiness and well-being of each of the individual family members. Without this mandate, the business, and along with it, family wealth eventually will be broken. Kind of like an old worn out guitar string which eventually breaks.
I recently spoke with Clint Strait Vice President of Strait Music Company. a full-line and piano retailer based in Austin, Texas. Clint represents a 3rd generation family member working in the family music store. The Strait family exemplifies this lofty definition of the purpose of family. Clint indicated to me that he was never pressured by his parents to enter the business. He went off to Colorado State University, graduated with a marketing degree, but took the time to see what the world was about, beyond Strait Music. He worked in Denver for about 10 months, did some door to door sales, and an internship on Madison Ave. in NYC. In 2006, he found his calling and now adds values every day to Strait Music, under the guidance of his father Robert Strait.
And like many multi- generational music retailers, there’s a visionary patriarch or matriarch and yes, there were challenges. As written on the straitmusic web site.
In 1963, Dan Strait moved his family from Houston to Austin when an opportunity arose to open a Baldwin piano franchise. That first store, Strait Piano and Organ, occupied a small space in a shopping center along Lamar at 9th St. Dan’s motto was “where customers become friends”–a sentiment that endures to this day!
The catastrophic Memorial Day flood of 1981 claimed many lives in the area and nearly “sank” the business and all of its inventory. There was over 7 feet of water in the piano department alone and pianos floated off down the street. We had no flood insurance either. Through help from our vendors and a lot of good loyal customers, the business stayed afloat. After those dark days, Dan decided it was time to turn the reigns over to his son Robert, who is still the company president today. Robert endured a second flood in the holiday season of 1991 as well.
The need for more floor space (and less flooding!) prompted a move to a larger building in 1995, formerly occupied by a Toyota dealership at 5th and West St. in downtown Austin. That property is now the Monarch building.
1998 saw the launch of our second location at the intersection of Highways 183 and 620 to serve the growing Northwest Austin area. In 2001, Strait Music made the move to its biggest and best location yet, the Lakehills Plaza shopping center at the corner of Ben White and South Lamar. That location is now our flagship store and we have no plans to move anytime soon!
In 2006, the first 3rd generation Strait, Robert’s son Clinton, came on board and now serves as the company’s vice president.
There is a familiar aphorism- Shirtsleeves to shirtsleeves in three generations, which describes the pattern of family owned enterprises to fail by the time the founder’s grandchildren have taken charge. Clint Strait, has now bucked the odds and while his young son is already showing an interest in music, no pressure on the 4th generation to join the family business. Leo’s happiness is all that’s important.
Please note- Strait Music is not affiliated with BH Wealth nor endorsed by First Allied Securities.