Locksmiths have key to family business

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This article was published 14/09/2009 (5961 days ago), so information in it may no longer be current.

A local family of locksmiths has cracked open the mystery of how to successfully hand off a business from one generation to another.

Experts estimate that 70 per cent of all family owned businesses fail in the second generation, and only 10 per cent of them survive a third generation of ownership.

So the odds were definitely against brothers Frank and Brian Senden when they took over the reins of Noble Locksmith Ltd. from their parents, Tony and Valerie, in 1994.

But 15 years later, not only is Noble Locksmith is still in business — in fact, it’s celebrating its 100th year in business this year– but it’s bigger and more successful than ever.

“We’ve continued to expand at a slow but steady rate and we continue to grow,” Brian Senden said in an interview at the company’s quaint, 3,000-square-foot shop at 249 Notre Dame Ave., in the Exchange District.

Frank admits the locksmith business has changed a lot in the 10 decades since Winnipegger George Noble launched the company that still bears his family’s name.

Sure the backbone of the business is still installing and servicing locks and safes. But the kinds of locks and safes has undergone a big transformation.

Gone are the skeleton-type keys and latch-style locks that would have been prevalent in George Noble’s day. Today, it’s electronic locks, with their backlit keypads and three-to-eight-digit pass codes, that are in big demand.

“We’re a convenience-based society, ” Frank said, “and people would rather use codes than keys.”

Home safes have also been growing in popularity over the last 10 years — mainly the chest-styled ones that bolt to the floor and are big enough to hold things like passports, wills, financial documents and jewelry.

Those are also the safe of choice for most businesses these days, although bigger is no longer better in the eyes of most of Noble Locksmith’s corporate customers.

“A lot of the materials that used to be stored on paper are now stored on computer,” Frank said, “so the smaller units will suffice.”

When Frank and Brian took over the company, Noble Locksmith had 10 to 12 employees and a half a dozen service vehicles. Today it has 18 workers (excluding them) and 10 service vans.

Brian admits there were plenty of naysayers when they took over the business from their father, who had been a co-owner since 1971 and full owner since 1979.

“Taking over the family business — they said that was one strike against us,” Brian said. “And going into business with your brother — they said that was another land mine. But we were determined to prove them wrong and make it work.”

The brothers said their parents deserve most of the credit for the successful transition in ownership. They started planning the succession years in advance, sought the advice of a lawyer, an accountant and other experts, and drew up a written contract that spelled out how everything would be handled.

“It was very structured,” Brian said. “They set us up to succeed, and gave us more of an opportunity (to succeed) than we realized (at the time).”

It also helped that both brothers had been working at Noble for 15 years, were well versed with its operations, and had already established their own roles based on their individual strengths and interests.

Brian enjoys the administrative tasks — things like overseeing the payroll, accounts payable, and all that other office stuff. And Frank would rather be out in the field, meeting customers and providing estimates and quotes.

“So we kind of complement each other, rather than both of us doing the same things and butting heads,” Brian said. “It’s just always worked and it’s never been an issue.”

The president of the Manitoba Chapter of the Canadian Association of Family Enterprises said that unfortunately, not all successions are that smooth.

Diane Sparrow, whose family owns the Norwood Hotel and Inn at the Forks in Winnipeg, said communication and consultation are keys to any successful succession. She said family members need to communicate with one another and get a clear understanding of what their roles will be, and what the long-term vision is for the company.

“You need to know who is going to be the head of the business. But it (the succession plan) also needs to be fair to all the family members,” she said.

And because there are a myriad of legal and financial issues that need to be addressed, Sparrow said it’s imperative to seek the advice of a lawyer, an accountant, and other outside experts. That includes obtaining an outside appraisal of the value of the business — something the Sendens also did. “That way you know where your starting point is, in a sense,” she said.

murray.mcneill@freepress.mb.ca

What can be done?

Only about 30 per cent of all family owned businesses survive a second-generation ownership. Here are some things that can be done to increase your odds of survival:

“ö Put together a formal succession plan that spells out how the transfer in ownership will take place and the role of each family member in the business.

“ö Obtain an outside appraisal to determine a fair value for the business.

“ö Seek the advice of outside experts, including a lawyer and an accountant, to ensure the necessary legal and financial issues are addressed.

“ö Join an industry association and talk to other members who have gone through a succession about what worked for them.

— Source: Diane Sparrow, president, Manitoba Chapter of the Canadian Association of Family Enterprises