Corner Office: A Successful Family Business Transition

Here's how extensive planning helped the leaders of Westhill Design/Build pass control of the firm from one generation to the next.

January 31, 2010
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Executive summary

When Charles "Charlie" Russell founded Westhill Design/Build in 1974 just outside Seattle, he specifically chose a name for his new company that was snappy and succinct. "I wanted something that would be easy to remember," says Russell. The moniker marked his new firm's first project, which was on the west hill of another Seattle suburb.

Today, Westhill is "so synonymous with remodeling in Seattle that I've never been able to change it, even though I've considered it," he says. These reflective moments started after his son, also named Charles and known as "Chuck,' joined the firm in 1989 at age 22. That's because the firm began to expand in a meaningful way only after father and son joined forces, bought out the elder Russell's partner in 1994 and deliberately "decided to grow it," explains the younger Russell, who also acquired 25 percent of the business at that time.

And in the past five years, those reflective moments have intensified as both Russells have faced succession planning along with the usual concerns of running a remodeling business. This particular issue became most salient as the company grew to its 2008 pinnacle of $11 million in revenues and 50 employees.

Succeeding at succession

Like most family members who work together, the team has its ups and downs. "Sometimes we found it very challenging to draw the line between family and business, especially since we are polar opposites," says Charlie, who characterizes himself as "more impulsive and forward-charging" than his "laid-back, unflappable" son.

 

If Harvard’s projections of a recovery in the second quarter of this year are correct, it would be the first time remodeling activity has increased since early 2007.

They had hired a business coach almost three years earlier to deal with all aspects of their business, and the coach also happened to have a specialty in succession planning. With his help, they worked on smart internal structuring to give each Russell his own domain. This led them to divide the top responsibilities between father and son and lay out a succession plan, which has become more meticulously detailed over time.

At first, a large part of the plan was simply to empower Chuck. "When I was in the office, everything ran through me," says Charlie. Their solution got Charlie out of the office for long stretches of time and raised their profile. "I became more active in the National Association of Home Builders (NAHB) at both a local and national level," explains Charlie. "If forced me to get out of the office and allowed my son to grow into his job."

Two years ago, Charlie became CEO, Chuck assumed the role of general manager and the two men began to share the president's position. About that same time, they brought a business advisor onboard to fine-tune their relationship glitches. "[They] had carried over and affected our decisions and operations, even though we didn't realize it," says Charlie. The moves were great for business, and by the beginning of 2008, the staff topped 50 and revenues hit $11 million.

Responsive measures

That changed the following year when the economy tanked and customers curtailed spending. Westhill was forced to lay off half its staff as revenues fell to $5 million at the end of 2009. "We're back to our 2002 levels, but in this market that's not bad. The only reason we were able to do even this amount (in sales) is because of what we invested in marketing this past decade," notes Charlie.

But father and son have big plans to bounce back, which is their second greatest challenge right now. "Our new company slogan for 2010 is 'Think 10.' It stands for $10 million (in sales) a year for 10 years," says Charlie. "I know we won't reach it in 2010, but we'll be well above it in 2011 or 12," he says.

Sticking with what works

The Russells believe good relationships start at home and, says Chuck, they have actively promoted and developed a family culture and team building. A close-knit, six-person executive management team runs the company. "It was extremely hard for us to let anyone go, and we plan on rehiring as many as possible when business improves," says Chuck.

 

Charlie Russell (right) and his son Chuck structured their business so each has his own responsibilities. A business adviser helped fix relationship glitches. 

The Russells have also participated in an NAHB Remodeler 20 group, which has paired them with peers in non-competing markets who meet regularly to share knowledge that can improve their performance and profits. Through this program, they met the business coach who started them down the road to succession planning as well as advised them on all aspects of their operations, from personnel issues to marketing campaigns. "It's been our best innovation in the past five years," says Chuck. Broadening horizons

As Westhill grew, the Russells added other service-oriented divisions where there was need, and last year had five: custom home building, remodeling, design (complete with a licensed architect and interior designer), small jobs and handyman. New for 2010 is an insurance mitigation and reconstruction division, complete with software that will communicate directly with insurance companies. It came to be because "we had so much demand to do it from past clients but could never get to it until things slowed down," admits Chuck.

In this recession, the strategy has proved its merit. "Over the last 15 years, our business was 60 to 70 percent remodeling and 30 to 40 percent custom building, but last year we did zero custom homes and handyman came in second," says Chuck.

However, even their economical handyman service has been compromised by the recession. Competitors doing jobs at cost and unemployed carpenters trying to subsist are cutting into sales in this division. Their solution has been to focus on the value of using a company that is established and can stand behind their work.

New school marketing for an old school biz

"We've always spent so much money on marketing, and our efforts have been so successful, that our peers used to tell us we were crazy," laughs Charlie. In prior years, Westhill has had the enviable task of "having to turn away work," he admits. And with the 20/20 vision of hindsight, he believes "those campaigns are the reason we're even around today."

In the beginning, their efforts were old school. Now, Westhill is in the midst of interviewing marketing firms who can help them mount an integrated campaign that will utilize social media. With their marketing budget set at its pre-recession high, both men are confident that increases in lead generation and their closing rate are forthcoming.

 

Executive summary

Westhill Design/Build, Woodinville, Wash.

Ranked No. 3 in Seattle on the 2009 Market Leaders list

Chairman: Charles Russell

President and General Manager: Chuck Russell

Specialty: Remodeling, repair, design/build

2008 volume: $11 million, 153 completed projects

2009 volume: $5 million, 259 completed projects

Founded: 1974

Biggest challenge: Implementing a new marketing plan to increase sales.

Website: www.westhillinc.com

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