That is why the National Shoe Retailers Association has unveiled its Next Generation program to help second- and third-generation retailers navigate the challenges that can arise when they work with their parents. The first event for the new initiative was held last month in Chicago, led by Andrew Keyt, director at Loyola University’s Family Business Center.
“I found the most useful part about the meeting — other than the business tips and advice — was knowing that other people my age are also going through the same trials and tribulations,” said Daniel Hanig of Chicago-based Hanig’s Footwear.
Michael Wittenstein, stepson of Karavel Shoes owner Rick Ravel, agreed. “The best thing about it for me was really getting to know and bond with the other participants. There are not many people in our situations who know what we’re going through or will be going through,” he said.
During the first session in Chicago, Keyt guided the group of 12 through various topics, including building leadership skills, confronting succession challenges and managing family and employees.
The potential points of difference between generations are endless, said Keyt, from communication issues to clashing opinions regarding inventory or technology.
“It’s critical for next-generation members to learn about the challenges they face because only 33 percent of family businesses survive the first-to-second-generation transition,” he said. Of that group, only 12 percent continue into the third generation, and of that 12 percent, only 3 percent make it into the fourth, according to the Small Business Administration.
“What we find is that often family issues, not business issues, cause the problems,” said Keyt.
Wittenstein said that initially he was anxious about joining the family enterprise. “I’ve only been working in the shoe business for a year and a half,” he said. “Thankfully, the Karavel staff welcomed me with open arms, but I was worried that people would think I wasn’t qualified. Gaining employee trust is extremely important.”
Veteran retailer Peter Hanig, owner of Hanig’s Footwear, recalled the difficulties he encountered when taking over his business.
“I’m a second-generation retailer and my father and I had a rough time going through the transition,” said Hanig, who now works with his son Daniel. “My brothers left because of that, so I’ve experienced it first-hand when the plan doesn’t work.”
Successful transitions, said Ed Habre, owner of The Shoe Mill in Portland, Ore., also depend on the older generation’s willingness to “let go” — another point the Next Gen program touchs upon.
“Opening up that dialogue is not an easy thing to talk about. It can be a sensitive subject. My father has worked extremely hard to build his business,” said John Luck, son of Lucky Shoes owner Tom Luck. “The topics were exactly what we needed to talk about.”
Habre, whose sons are participants in the new NSRA program, had some advice for his peers: “Learn to delegate responsibility. Then step back and trust your kids to perform based on their understanding and knowledge. … I’ve micromanaged my kids’ whole lives,” he joked, “but we’re in business together now.”
The Next Gen session in Chicago also put the pressure on participants to start talking about succession plans as early as possible.
Daniel Hanig said that although his father is not looking to retire anytime soon, he now feels “it would be appropriate to delve into the details of how this transition is going to work.”
Looking ahead, Facebook groups and social networking should help the participants stay in touch, and another session is being planned for spring. Ideally, a new class of members will start the program each fall, commented Jim Sadjak of Stan’s Fit for Your Feet in Wisconsin. Additionally, the NSRA is looking into scholarship opportunities to help more retailers participate, especially those that are struggling financially.
“We know we’re just scratching the surface,” said Habre, who just finished his run as NSRA chairman. “We’re deeply committed to this, and NSRA is putting financial resources behind the program and looking for educational grants to fund [its development].”
According to NSRA President Chuck Schuyler, the program is critically important at a time when independent retailers are struggling the most.
When the organization was analyzing businesses that have closed over the years, a distressing theme emerged, said Schuyler.
“We came to the conclusion that it was, in part, due to the incoming generation not being fully prepared to take on the challenges of doing business,” he said.