If a lifetime -- or two -- precedes you in your business, you may have unique opportunities, opportunities young companies don't normally have.

We talked to the owners of more than a half dozen second-generation companies about such opportunities. They shared with us what they've learned from their businesses' longevity and what they will pass along to the next generation.

Nurturing relationships

If there's a common thread among passed-down companies, it's that they've learned how to nurture relationships -- with clients, employees, communities, peers, subcontractors, suppliers, even banks.

Tom Duncan of E.H. Duncan, The Bath & Kitchen Center, in Poland, Ohio, remembers that his dad, Elmer Harry, now 80 and retired, did business with certain vendors, and they took care of him. "As more vendors came in," says Duncan, "relationships were based more on price than loyalty, and he got away from that."

Now, Duncan's getting back to old-school relationships, and good pricing is still there. Duncan is drafting "partnering agreements" with about half of his 80 vendors so that he'll get a year-end rebate beyond his 2% discount, depending upon how much business he sends their way. Last year, the $3-million company spent $900,000 on materials. Even if he can get just another 2% on top of what he gets already, that's $18,000 Duncan can use to nurture relationships with his dozen employees or his 7,000-client customer base.

Duncan, like second-generation company owner Tom Kelly of Neil Kelly Co. in Portland, Ore., with 9,000 past customers, says you quickly learn you can't please everyone. You also learn to keep your database updated, because it's your gold mine. Kelly sends an annual newsletter to the whole list, and salespeople keep in touch with previous clients so that the company connects with people regularly.

To that end, "we are strong believers in advertising," says Kelly. "I hear from so many contractors that you don't need to advertise, you get all your work from referral and repeat business. But if you operate from the philosophy of 'how neat we are,' people forget you."

Besides contracting a PR and advertising firm to advertise in newspapers, on radio, at trade shows, or through direct mail, each Neil Kelly Co. salesperson has a budget for one client party a year, inviting friends and neighbors when projects wrap up.

It's important to develop relationships, because those relationships allow you to run a tight ship, says Sharon Bellamy, whose two sons are positioned to take over Bellamy & Sons Construction Co. in Scotia, N.Y. She recently was able to get a cheaper interest rate on a truck loan by telling her bank that she'd rather give the business to the bank than to the truck company's financing arm.

Jerry Roelofs (standing, right) gained second-generation expertise from his father, Ken (seated, left), who retired in 1997. Jerry hopes to pass along his business smarts to stepsons Andy Irving (standing, left), production coordinator, and Chris Irving (seated, right), who heads handyman sales.
John Noltner Jerry Roelofs (standing, right) gained second-generation expertise from his father, Ken (seated, left), who retired in 1997. Jerry hopes to pass along his business smarts to stepsons Andy Irving (standing, left), production coordinator, and Chris Irving (seated, right), who heads handyman sales.

Communicate and delegate

In communication, delegation, and systematization, many second-generation owners say they learned what not to do from their parents. That's not to say that every parent was a tyrant with a firm hold on the business who delegated through osmosis.

Chuck Brownlow, whose grandfather started the precursor to Brownlow and Sons Co. in Atlanta in 1945, remembers his dad's huge Motorola two-way radio under the seat of his pickup in the 1960s. To this day, Brownlow values keeping in touch with employees through pagers, cell phones, voice mail, and fax. And he was lucky to learn that through communication, his father delegated to others and didn't do everything himself.

Learning from the first generation and correcting mistakes is valuable, Bellamy says. She, her husband, Bruce, and their sons Brian and Greg meet once a week, making joint decisions related to marketing, problems with employees, problems with each other, or deciding where to grow or how to grow.

Dan Luck of Modern Kitchen in Madison, Wis., says he saw how his father, J.R., (now retired) used a traditional, controlling management style, and how employees reacted. Dan's style is more team-oriented, and he's learned to delegate, surrounding himself with other successful people. Too often, young companies are focused on "getting going and making it happen," and they don't realize they have weaknesses and need help, he says. "Second-generation companies say, 'I'll go out and get help and take advantage of what I do best to go full bore ahead,'" he says.

Delegating also means educating, says Kelly, and mentoring others helps your business grow. His father's legacy was education, and Kelly has about 15 Certified Kitchen Designers on staff, with five more studying for the designation.


"My father left me with a tremendous reputation, a tremendous client base, and a sense of how to treat people, how to be fair," says Jerry Roelofs, of Roelofs Remodeling & Renovation in Minnetonka, Minn.

"He didn't leave much in the line of systems," however. "We had habits. We did things generally the same way all the time, but we did a lot of stuff by osmosis and ESP."

Roelofs says he knows that for his sons coming into the business, he will have to be systematized and focused on business, not just focused on trade skills. "My primary focus is to try to teach them better than my father taught me in systems, financial reporting, and marketing -- with the hope that they can understand faster than I did. Their experience won't be equal to my own, but the understanding will be."

Cindy Knutson-Lycholat of Knutson Brothers II, East Troy, Wis., uses several of her father's systems, including a variation of his 50-year-old preconstruction agreement and his lead sheet. She says she learned that if people take time to help her fill out a lead sheet, they're earnest about seeing someone to discuss their remodel. She learned never to waste time with a poor prospect. As a business owner, "time is your most precious commodity," she says.

But Knutson-Lycholat is much more niche-specific than her father, Charlie, was: She focuses on homeowners who can afford to remodel their vacation properties.

Her father also taught her to pay attention to her business, especially to review job costs on a daily, weekly, and monthly basis. "Don't just print your financials," she says, "look at them. When something goes awry, try and learn from it so it doesn't happen again."

Give back, get back

If your company is an integral part of the community, that will serve it well long term, these longtime business owners say. Kelly says not only is he active in community affairs but his salespeople-designers are, too, in organizations where they feel comfortable.

Roelofs' dad, Ken, left a strong impression of giving back to the industry and the community through his involvement with the NAHB. Roelofs himself has carried on that tradition and is a past chair of his local NAHB Remodelors Council. He also has worked with NAHB headquarters and is soon to be president of Minnesota NARI.

"That may not mean, when it comes down to it, anything for my company," he says. "But it means being well-rounded in terms of not living and dying for the bottom line or what happens in the office. It means keeping yourself grounded in the community and the marketplace."