Q&A: How to keep a 127-year-old family business alive

October 25, 2016 9:01 AM EDT

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By Beth Pinsker

NEW YORK (Reuters) - As a preteen, Howard Kahn could not have had less interest in his family business - the Kahn Lucas girls' dress company, founded in 1889.

He was not a customer. He had no interest in fashion. And he did not work on the factory floor in Lancaster, Pennsylvania during summer vacations.

But when Kahn was 24 and working for Walmart in Bentonville, Arkansas, his dad offered him a job, and he could not resist.

Now 47, Kahn is a fourth-generation leader of the company, which includes the fashion lines Emily West, Bloome and Sweet Heart Rose, as well as Dollie & Me and the Madame Alexander Doll Company.

Kahn spoke with Reuters about keeping a family business thriving, generation after generation.

Q: If the family business did not influence your passion, who in your family did?

A: At a young age, I did a lot of mock investing. My grandmother, Beverly Kahn - my dad's mom - was a big influence for me. She was well known on Wall Street as one of the first women to have a significant job. She was an institutional broker.

Q: What was it like when you joined the family business?

A: When I graduated from college, I was interested in tech information systems. I got a bunch of job offers, and the best offer was from Walmart. First they put me through the store manager training program in a town of 2,000 people, so I could learn the business from the stores. Then I moved to Bentonville. I learned a lot.

When it looked like I was really enjoying myself, my parents got concerned I was going to live in Arkansas permanently. At the same time, the family business was having difficulty. The 90s were challenging. So my dad called me up and asked me to come work there. When your best friend calls and asks you to come work with him, you think about it.

That was in the beginning of 1994. I worked on some factory floors, learning from the ground up. There was very little nepotism. I was abused by everyone.

Q: What have you learned about what makes a successful family business?

A: A family business has to be run as a meritocracy and as a business, not a 'family' business. Lot of companies have failed because it becomes a home for taking care of non-performing family members. We did the opposite. My younger brother and sister are both brilliant, and they have other careers. I bought everyone out.

Q: What have you learned from your mistakes?

A: On a strategic level, one of the things that has kept us successful for 127 years is that we are very agile. I'm comfortable being uncomfortable. Right now, we're undergoing radical changes in how we are approaching our business. The industry that we're in is under incredible pressure. and companies are evaporating left and right. We are really flexible and not married to anything.

Q: You worked with your dad for years before you took over the company. But what did your mother teach you about money?

A: My mom is very humble and she has always impressed upon me - as has my dad - the importance of living within my means. And that is an important lesson.

Q: Your family foundation mixes with the philanthropy of the company. How do you decide what to get involved with?

A: We're very involved with a bunch of organizations. One is K.I.D.S./Fashion Delivers; the industry gives $155 million in new product to girls around the world.

We created a neat project with the global charity, CARE, called Patterns for Progress. It is a kit to give parents what they need to create an outfit for a girl, with instructions. I was in Liberia in refugee camps when Ebola hit. On those cards they make you fill out about travel, it asks have you been in certain counties - for a while, I had to say yes.

Q: What values about philanthropy do you want to pass along to your three children?

A: My dad always led by example. I see a lot of times where philanthropy is forced on kids. That's not really my wife's and my style. We want to lead by example. So far it has been pretty effective.

(Editing by Lauren Young and Bernadette Baum)



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