Options when a family business runs out of family

Chip Renfro's small business story doesn't yet have a tidy ending, but it is a tale many owners of family businesses can identify with.

Renfro is the second generation owner of Renfro Auto Center, Inc., a fixture on Wheaton's east side since 1962. In an industry that often draws consumer complaints, Renfro and his business earn high marks for integrity and service.

Doesn't matter. There will be no third generation taking over.

Renfro, who has two sons in their twenties, has "never wanted my kids in the business. This business takes too much out of you. I'm here 13 hours a day, four days a week (plus shorter hours on Friday). My back hurts every night when I go home."

More typical than Renfro's family-first, no-next-generation decision, says Kriss Knowles, is that the kids decide not to take on the family enterprise, a situation that "comes as a surprise. Dad thinks the kids will go to college and come home to run the business," says Knowles, director of the Illinois Small Business Development Center at Elgin Community College.

"Then the kids go to college and discover something they like better. Or when they work summers in the business they discover they don't like working with Dad (or Mom)."

Renfro didn't plan to work in the family business either, but family issues brought him home from college because "It was easier to deal with them by being here," Renfro says. "I had plans to do other things, but one week turns into a month and months turn into years."

Ultimately, as is the case with many business owners, selling the business became part of Renfro's retirement plan. Now, however, he says "I don't think I can get enough to retire. This is a tough time. It's hard to sell a service business."

True. There seem to be positives, however. Renfro has time; he's not yet 60. As consumers keep their cars for longer periods, those vehicles will need more tires, new batteries and the types of repair Renfro does.

Still, Renfro says, "It would be nice to wake up and know I had only two more years."

It's impossible for you or me to know whether two years would be realistic, but at least one outsider says there are options when family businesses run out of family.

Younger people in the industry may be willing to buy in, says Linda Purcell, president of Purcell Associates, LLC, a Palatine-based business brokerage. "A manager who is working somewhere else may be interested in buying rather than going through the trials and tribulations of a startup," she suggests.

"Owner financing that provides a stream of income is a possibility. If there is positive cash flow, SBA-guaranteed financing is a possibility."

• Questions, comments to Jim Kendall, JKendall@121MarketingResources.com. © 2010 121 Marketing Resources, Inc.