I am writing this column on the 25th anniversary of the day my father died. At the time, I had spent a little less than two years as his protegee in the family construction business, which was never part of my original career plan.
It would be impossible to place a value on the time we spent driving around looking through the windows of projects under construction, discussing how we would have done it better or meeting with clients. I sensed that this was the way fathers acted with their sons as they prepared to pass the torch, leaving a legacy for future generations.
In many ways, all businesses are family businesses, in which the lessons drawn from both successes and failures are transferred through mentoring relationships. This process creates the corporate culture that is absorbed by everyone working in the company, and it affects financial decisions as well as relationships.
My father and I had somewhat different ideas about how to manage a construction company. He assumed control of his father’s business in his early 20s, after serving with Admiral Halsey in the Pacific during World War II. I was a decade older, an M.B.A. in transition, intending to move on to a corporate job. He was trained as a craftsman and learned to be a manager. I was trained as a manager who learned the craft—at least enough to discuss our work intelligently with both customers and employees.
As a man in a man’s industry, my father developed easy relationships with customers and vendors. He was loyal to his banker, not his bank, and got the credit he needed. He preferred to spend money on materials and labor, and only grudgingly on accountants and lawyers. When times were good, he took money from the business to benefit his family. When times were lean, he paid himself last, to benefit his employees.
As a woman, I faced different challenges. I joined industry associations and took classes, finding that knowledge opened doors, but my father broke down barriers by clearly anointing me as his successor. A few months after he died, one customer admitted that his company had considered finding another subcontractor, but when the next few jobs were completed on time and with the same quality standard, they relaxed. The family name carried us through until performance ratified the new management.
Other transitions were painful. Though payments were current on our loans, my father had begun to move company assets from the bank that held the debt. When the notes were called, we scraped to find the cash. It made little difference that my mother’s house and cars were debt-free—no provision had been made for bridging over such a timing issue.
My father ran a small company, with his close friend as shop foreman and his mother as the secretary. After he died, my mother and siblings stepped in to help with the transition, though we all realized that the company would not support multiple households without substantial growth. Our most experienced craftsmen were past retirement age. The building needed repairs, and we were facing costly technology upgrades. Since my father never expected any of his children to succeed him, especially his oldest daughter, he had not had time to formalize a succession plan. And he did not expect to die at 63.
It took some time to recognize the financial legacy he left. I had missed the late 1970s, when a fifth of the revenues went uncollected because of customer bankruptcies, but he had shown me how to acquire the “bread and butter” jobs—the subdivisions that provided steady billings with reasonable profits to fill the schedule between the complicated, detailed, high- profit jobs in which we specialized.
I watched as he refused to lower his prices with the response, “Well, not everyone can afford the best,” and his modest chuckle softened the remark but made the point. By limiting capacity, he enticed customers to forward substantial deposits to ensure a place on the schedule. His name was on the building, and it meant more to him than profit. But the name stood for quality, and the profits came.
There was a mystique about Will Norberg, “the man who only takes the jobs he wants to do.”
When I think about the financial legacy my father left me, it is based on what I observed and what he said directly. Here are the key points:
1 There is nothing sacred about a business; it is a tool to be used. When it stops being fun, go to work for someone else.
2 When your name is on the door, your reputation is your most important asset.
3 Take money out of the business when you can afford it, but pay yourself last when money is tight.
4 Create a niche that allows you to choose the jobs you want to do, and refuse to compromise your price or your quality.
What will be your financial legacy?
NORBERG-JOHNSON is a former subcontractor and past president of two national construction associations. She may be reached at email@example.com.