July 26, 2021

Do Most Family Businesses Really Fail by the Third Generation?

Great article in this month’s Harvard Business Review about the strategic advantages of family business. The premise is interesting and relevant to us for many reasons, including this passage about RLC:

“For example, Robinson Lumber Company, established in 1893 and based in New Orleans, is today owned and managed by the fifth generation of the founding family. At the heart of their success is a way of doing business that puts long-term survival above short-term profits. The company sells a combination of wood products that, if one were building a company from scratch, would not make sense to combine into one business. Species, colors, and other trends come in and out of fashion over the years, so typically while some of the company's products are doing well, others aren't. At those points in time, it might be most profitable to abandon the unpopular products in favor of the current performers, but to do so would put the company at risk of irrelevance when tastes change again.

Also, like many family businesses, Robinson Lumber doesn't borrow much from the bank. Debt is a great way to fund growth and goose return on equity, but it also puts the company at risk during the inevitable downturns in the economy. Family businesses last longer because they are able to pay the price that longevity requires.”

While the article mentions RLC in the context of our longer history, it also underscores the relevance of our Mission to profitably help our customers and suppliers succeed in the wood products industry, while maintaining our culture as a professionally managed family business where people want to come to work.

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