JUST LIKE OLD TIMES
In an era of shopping online in only seconds, how do some small businesses stay open centuries?
Inside the Houston Shoe Hospital’s Palmer Street warehouse, machines hum as craftsmen in stained cotton aprons trim heel caps by hand and peer at fresh-polished boots. Some of the workers, now in their sixties and seventies, toil alongside their adult children. In a city where businesses, houses and even neighborhoods can disappear overnight, the Shoe Hospital has occupied the same building since 1906.
In business, lasting a century or more, let alone in one spot, is no small feat. Yet the Shoe Hospital’s longevity is not unique.
In New York’s Barney Greengrass eatery, “The Sturgeon King” himself still watches from a framed photo over the eponymous company he launched in 1908. His legendary family business has purveyed bagels, lox and other noshes from Amsterdam Avenue and 86th Street through two world wars, the Great Depression and Upper West Side real estate prices.
In the U.K., butcher shop RJ Balson & Sons recently marked 500 years in its original spot in Bridport, having sold bangers and sausages through the Reformation and on into the English Civil War.
How do they do it? According to the Small Business Administration Office of Advocacy, 80 percent of small businesses survive the first year. But it’s usually downhill after that. Only about half make it to five years, and after that, just one in three reach the 10-year mark. Few make it to 100.
In Houston, Montalbano Lumber has occupied the same spot on Houston Avenue, since Italian immigrant Francesco Montalbano started selling firewood there in 1900. Across eight acres of warehouses overlooking downtown, the businesses’ forklifts ferry stacks of lumber for customers. Inside, contractors and homeowners browse rows of siding materials, lights, paints and tools.
The business has thrived despite the advent of big box stores in part by staying true to its niche in lumber, Montalbano said. Now, the company is fifth generation-owned. Similarly, New York’s Barney Greengrass zeroed in on a niche with its top-quality fish, and England’s RJ Balson &
Sons did the same serving specialty meats. For all three, being family-owned has also helped: Owners treat employees and customers like they’re a part of that family and their loyalty has been returned. “Our employees have been with us for decades,” said Joe Montalbano, the company’s director of administration and Francesco’s great grandson.
“Somebody can always beat you on the price,” said Montalbano, who works alongside his father, Mike, the company’s
CEO, and his uncle, who’s vice president. Joe’s brother and cousins are also involved. “Somebody may have the newest trinkets or items we don’t carry. What it boils down to is loyalty and trust.”
Rice Business professor Anastasiya Zavyalova, professor of strategic management, confirms that the family connection is often what builds that unusual level of trust. Because the names of a founder or owner become intertwined with the name of the business, she said, the business takes on a larger role in the community.
“It's the reputation of the founder and the owner that spills over onto the reputation of the business,” Zavyalova said. “If there’s a trustworthy founder that everybody in the community knows and loves, by extension, customers trust that the business will deliver, and if something goes wrong they know they will take care of it.”
The importance of family to business longevity is so great that in Japan, which boasts some of the world’s oldest businesses, business owners have gone to great lengths to keep that family connection alive.
Japan is home to the world’s oldest hotel, the Nishiyama Onsen Keiunkan, which has been nestled for more than
1,000 years amid hot springs in the South Japanese Alps. Like many of Japan’s oldest companies, it’s been in the same family for more than 50 generations in part due to a common, centuries-old Japanese practice: adopting heirs. In cases where there’s no child to inherit a business, a business owner will legally adopt an heir like a sonin-law as a “second-birth son.” The technique is known as “Mukoyōshi.” It’s why a vast number of adoptees in Japan aren’t children, but men in their twenties and thirties.
Dutch business theorist Arie De Geus analyzed 30 businesses that have lasted for centuries, and found they share four common traits. In his book, The
Living Company, he found longlived companies were sensitive to their environment, had a strong sense of identity, were tolerant, and frugal. De Geus summed it up in one sentence: “Companies die because their managers focus on the economic activity of producing goods and services, and they forget that their organizations’ true nature is that of a community of humans.”
Zavyalova, the Rice professor, agrees. In addition to reputation, she said, family businesses may also endure because of the way they run their business. For many, it’s more about leaving behind a legacy for the next generation and less about making large amounts of money.
Indeed, research has shown that family owners consider both economic and non-economic factors like legacy when making business decisions. Family businesses are also less likely to lay off employees despite financial performance, and support strategies that put employees and customers first. One family-owned business survey found that facing more meager earnings, 76 percent of family business owners said they would reduce or not take a distribution, while 58 percent said they would reduce or not take a salary. Family-owned businesses also tend to have less debt, which can allow them to behave more nimbly during a downturn. That was certainly the case for Montalbano’s, said Joe Montalbano. The Great Depression years, the 1980s oil bust, and the 2008 downturn were all rough patches, he said. For the most recent downturn, “we didn’t have any debt,” he said. “I think that was key. We were able to weather the storm.”
Houston novelty shop Southern Importers had that key combination of family ownership, loyal customers who enjoyed seeing long-time employees and a well-defined niche. For 104 years it sold party and theatrical supplies, costumes and decorations, and drew generations of Houstonians and celebrities. Many employees worked there for 20 years or more.
Then, this year, the business shuttered. It had been a major supplier to theater groups, department stores and costume companies. But when those sales dwindled in part due to a rise in online sales, it lost its niche, owner Milton “Mickey” Frost, III, told the Houston
Chronicle.
Nearby in Montrose, where a bungalow worth $40,000 20 years ago can fetch up to $300,000 today, dry cleaner Up To Date Cleaners is still going strong after 109 years. The business is beloved by law enforcement for the deals it’s given workers who serve the city.
Brothers Rahel and Sadiq Momin recently purchased the business from a family who bought it from Nick Arapolis, grandson of the original owner. Since the 1900s, early, clunkier equipment has been replaced with more sophisticated machines with bells and whistles. Yet Momin also works at preserving the past by cultivating time-honored business strategies. A top priority: reviving the partnership with the Houston Police Department, which the previous owner let lapse. “We’re trying to get back to that bond that Mr. Nick created,” Rahel Momin says.
Now living in Austin, Arapolis, who’s in his 80s, still drops by the store when he’s in Houston to press his own blue jeans and visit with long-time employees — many of whom have worked at Up To Date for two decades. Rahel relishes both the visits and the reminiscing, and he takes to heart the business advice Arapolis imparts. “We treat him like he still owns the place,” Rahel says.