Recession forces changes for mom and pop businesses [Long Island Business News (NY)]

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Family businesses are taking unique, sometimes drastic measures to keep the dream alive.

The family firm rolls with the same economic tide as everyone else. But when fiscal waters roil, the risk may be greatest for mom, pop and especially the kids, who might've banked on a sinking ship. "Now they have to go out and develop new skills and get other jobs," noted Garden City attorney Ellen Victor. "They didn't just lose a job. They've lost their livelihood."

Such inglorious ends often await businesses that skip niceties like succession planning, according to Victor, who specializes in corporate matters and elder/estate planning. She's repeatedly sung succession-planning tunes in her small business blog, but the warnings have met deaf ears: Succession planning is generally viewed as "important but not urgent," Victor said, and such legal expenses are routinely shelved when belts tighten.

"People know they should do it," she noted. "But it's not as important as paying bills."

The attorney referenced other failed attempts at do-it-yourself law, including a corporation with no partnership agreement, allowing one partner to abscond with the kitty. Businesses are trying to save money where they can, she said, and it's a true risk.

But not every family business is submerging, for poor legal planning or any other reason. Many, by design or luck or both, are built to survive tough economic times, like old Westbury's Landow and Landow Architects - launched in New York City in 1922 by patriarch Abraham Landow and currently managed by his son, Lloyd, and Lloyd's three children.

The firm, said partner Robin Landow-Leviton, has made a few changes in response to the recession: Networking is definitely up, and the company has emphasized efficiency and economy through technology, allowing for better client interaction and more remote work opportunities.

But it's the executive leadership that truly insulated Landow and Landow during the worst of the recession. Lloyd and his brood are all architects, of course, but each boasts a different specialty that's enhanced the firm's client services. "In any business, if you have four principals, each needs to take on a different task," Landow-Leviton said.

Marc Landow, who joined the firm full-time in 1991, majored in design of the environment as an undergrad. Landow-Leviton, who joined in 1993, studied interior design and also gerontology, huge for a firm known for nursing-home designs. Glen Landow, who joined in 1996, boasts a commercial real estate license, "so we can help clients find the right site and understand zoning restrictions," Landow-Leviton noted.

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The firm is further emboldened by its focus on industries that are themselves recession resistant. In addition to its nursing home expertise (Lloyd recently chaired a New York Health Department nursing home subcommittee), Landow and Landow is highly regarded in health care and education circles. Fresh off a laboratory renovation project for Throggs Neck's SUNY Maritime College, the partners are developing a reconstruction master plan for the British International School in New York.

Many family businesses, even forward thinking ones, have had a tougher go.

Marc Zergebel remembers coming to his father's auto dealership on the weekends. The 11-year-old got to drive cars on the back lot and was hooked. "I swept the floors and emptied the garbage cans," he recalled. "I worked summers through high school and college in all the departments. I learned every facet of the operation.

Zergebel joined the business full time in 1996, and everything went smoothly - until October of 2008. "Boom!" he said. "Giant shift in the economy. The auto industry took the brunt of the downturn. American manufacturers were going to court and begging the White House for bailout money."

Zergebel responded by cutting overhead: lower salaries, slashed advertising budgets, reduced stock and most nonessential expenditures. "We cut expenses wherever we could to protect the bottom line," he said.

Management also struck a deal with its unionized service technicians. The dozen techs were guaranteed a flat rate for a 40- hour week, but "to preserve everyone's job, we had to find relief," Zergebel said. "So we asked them to vote on a 35-hour week." It was the equivalent of eliminating one-and- a-half positions without actually eliminating anybody, and the technicians approved.

However a family business manages rough times, perhaps the most important thing it can do is look ahead. "You always need to see what's there and offer new services to your client base," Landow- Leviton noted. "You can't pigeonhole yourself ... or put blinders on."

Attorney Victor agreed forethought is essential - but useless without proper legal protocols.

"People think their children will automatically succeed them but they don't plan enough for it," she said. "A lot of family businesses fail in the third generation because of that. It's frightening, but they don't realize how frightening until trouble hits."


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