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Lessons of Small Business Survival: What you can learn from the World’s Oldest Companies

Opening your own business is not without risk, but there are businesses out there that have managed to weather whatever storms life, politics, economics, war, social change and, yes, the weather, could throw at them. These companies, many still owned and operated by the descendents of the people who started them, have some very valuable lessons to teach today’s entrepreneurs.

Seven Lessons of Survival
Family Business magazine keeps a list of the 100 Oldest Family-owned Businesses in the United States. They identified 7 rules that, if followed, will foster sustainability for a small, family-owned business. These rules are:

  • Stay small.
  • Don’t go public.
  • Avoid big cities.
  • Keep it in the family.
  • Choose a business that won’t go out of style.
  • Be creative.
  • Persist.

Stay Small, Stay Private
Small companies offer their owners a level of flexibility that large companies just can’t match. They are also much easier to keep in the family than large corporations and by keeping the business privately owned, control over the business’ activities and future remains in the hands of those who know it best, its founders. Of course, this can conflict with the financial needs of the company, especially once it begins to grow, but if the founders intend to keep it small and keep it local, then keeping the company in the family is a good way to go.

Avoid Big Cities
While the dominance of farms on the list may skew things toward the rural, this little piece of advice does have something to it. Small towns and suburbs are places where small businesses can thrive. Such places usually have favorable tax structures to go along with an appreciation of the personal service and multigenerational aspect of the family business. Smaller cities and towns also tend to offer a more stable local workforce that appreciates having a local employer to work for.

Keep it in the Family
This rule certainly applied to the record holder for the world’s oldest continuously operated company, the former Kongo Gumi Construction Company of Japan. At the time of its acquisition by the Takamatsu Company in 2006, Kongo Gumi—which specialized in the construction of Buddhist temples—had been in continuous operation as a family-owned business for 1,428 years!

According to the company’s last president, Masakazu Kongo, the 40th member of the family to lead the company, flexibility in selecting leaders was a key factor in Kongo Gumi’s longevity. Instead of always giving the company leadership to the oldest son, the family chose the son or daughter who could best demonstrate the health, responsibility, and talent for the job. Another factor in Kongo Gumi's long existence was the practice of having sons-in-law take the family name when they joined the company. A common practice in Japan, it allowed the company to continue under the same name, regardless of whether there were sons in a given generation or not.

Choose a Business that Won’t Go Out of Style
There is very little in life as certain as death and taxes, but the fact that people will—in addition to dying and paying taxes—always eat, drink, sleep, sit, wear clothing, worship, learn and do the thousand other things that we take for granted each day is a given. Again, Kongo Gumi offers an enlightening example.

Getting in on the ground floor of Buddhism—a little more than a century after it was first introduced to Japan in 467 CE—worked very well for Kongo Gumi. Once conflict with the native Shinto religion was ended, the new religion, which had moved from India to China and then on to Korea and finally Japan over the course of about 2 centuries, really took off. This put Kongo Gumi in an ideal position to grow as the demand for new temples grew. The company did not, however, escape hard times. World War II, for example, was especially challenging but pragmatic management, understanding the changing needs brought on by the war kept the firm going. They went from building temples to making coffins.

The truth behind this rule can also be found in the make up of the Family Business list. Even a quick read of the entries will show that the list is made up primarily of family farms and funeral homes, after all, everyone eats and everyone dies. However, neither of these types of business counts as the oldest American company.

That honor belongs to a music company. In fact, it belongs to a company that traces its origins back to 1618, 158 years before there was an America and a world away in the Ottoman capital of Constantinople. The story begins with an Armenian alchemist named Avedis I who, while searching for a formula that would turn base metals into gold, hit upon an alloy of copper, tin and silver that had amazing sound qualities and was remarkably durable. He used this discovery to create cymbals of amazing power and quality. The sultan rewarded him with gold and a new name, Zildjian, which means “Cymbalsmith.”

Today, 390 years after Avedis I discovered his secret formula, that family business has a worldwide following in the music industry. They have remained true to their market but have developed new cymbal products and manufacturing techniques as times have changed and technology advanced. There is, however, one thing that has not changed: The secret formula, that goes all the way back to that Armenian alchemist, is still a closely-guarded family secret and the core of their success.

Be Creative
Creativity often means seeing an opportunity and taking advantage of it. Take, for example, the Seaside Inn and Cottages in Kennebunkport, Maine, which has been in continual operation since 1667. The roots of this family-owned small business, however, go back to the 1640s when an agent for King Charles II, named Fernando Gorges, asked John Gooch to live on the peninsula at the mouth of the Kennebunkport River in order to ferry travelers across the river in his boat.

It didn’t take long, however, for Gooch to notice that people wanted to stay on the peninsula for a day or two before continuing their journeys. Seeing the opportunity, Gooch expanded his house to include guest rooms and built a tavern. He saw the opportunity and was flexible and creative enough to seize it and make it play. Today, the Seaside Inn and Cottages is a resort covering 20 acres of beautiful beach and riverfront property and is run by 12th-generation owners Patricia and Ken Mason.

Of course, creativity can just as easily be applied to marketing. Consider Houshi, the oldest hotel in the world, which was founded in the year 717 in Awazu, a town in the Ishikawa Prefecture of Japan and consider the way they, by taking advantage of local history, custom and belief, have marketed both the hotel and the local hot springs. Here is the Houshi family story:

Guided by a logger named Gengoro Sasakiri, a noted priest named Taicho Daishi hiked high up sacred and isolated Mt. Hakusan in 717. While Taicho was asleep one night after beginning his rigorous training exercises, the deity of Hakusan appeared in his dream, saying:

"Near the base of the mountain is the village of Awazu. There, you'll find an underground hot spring with wondrous restorative powers that Yakushi Nyorai (the Physician of Souls) has bestowed upon it. The people of the village, however, do not know of this good fortune. Descend the mountain and head to Awazu. With the people of the village unearth the hot spring—it will serve them forever."

Taicho did as the god told him and made his way down to the village, where he sought the help of its people in uncovering the treasure that lay beneath the earth's surface. He had the sick immerse themselves in its waters, and their health was immediately restored. Taicho then ordered Garyo Houshi, his disciple, to build and run a spa at the site.

Creativity is important wherever you need to stand out or change direction. You need to see beyond your immediate surroundings and limitations to find the next step for your business and that takes creativity.

Taking that next step, no matter what is going on in the world around you, is a sign of persistence. You have to take what you have, regardless of surrounding circumstances, and keep going. “To each generation come challenges,” said Paul Hayward, the seventh-generation owner of The Homestead, a Sugar Hill, N.H., inn established in 1802, to Family Business. “The inn has survived for over 200 years through the Civil War, Great Depression, World War I and World War II,” Hayward says. “I am confident my family will see the Inn through present difficulties.”

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