Growing up as the youngest of three children, Emily Kanter vividly remembers the countless dinner conversations with her parents, Michael Kanter and Elizabeth Stagl, about the couple’s natural products retail shop in Cambridge, Massachusetts.
“The business has always been the fourth child in our family,” Emily Kanter said. “And it has always been the most needy and demanding.”
The store, Cambridge Naturals, has also been a highly successful and beloved community resource, as much a cause and a mission as a company, during the more than 40 years since the couple opened the doors.
Today, as they near their mid-60s, they are in the process of handing over ownership of the business to Emily, a carefully considered decision that required deep discussion and introspection for parents and child. Given that their two elder children had no interest in the store, the couple had considered selling the business before they began serious conversations with Emily and her husband, Caleb Dean, more than two years ago.
Their quandary is not unusual in the natural products and food industry, where thousands of former activists and health food pioneers opened retail stores in the 1970s and 1980s to promote better health, organic food and spiritual lifestyles. Those who stuck with it — there are an estimated 5,000 such independent stores around the US — are now reaching retirement age and face a decision on whether to close, sell out to strangers, or turn the business over to their children.
“My parents were getting to the point where they didn’t want to be involved day to day, but they still cared about the business and its future,” Emily Kanter said.
The allure was strong. She had worked at the store through high school and college, and had a deep affinity for her parents’ original objective of providing organic, fair-trade food and products in a local, independent setting.
“It became more and more appealing to me to step into the ownership role and take advantage of a business that has such a presence in the community,” she said.
So with a business card that reads “Second Generation Co-Owner,” Kanter has taken the leap, having moved back east from Portland, Oregon, last summer. Turning 30 this year, she is not unlike fellow second-generation offspring taking the reins of their parents’ small businesses, especially in the world of natural products. The trend is so prevalent that it spurred a trade group, the Natural Products Association, to create a Next Generation Leadership Committee, now headed by Emily Kanter.
For her parents, the decision to turn the business over to their daughter has been both exhilarating and stress-inducing, which is why they are making the transition slowly over the next couple of years. The plan is to transfer ownership stock gradually over the next 10 years.
“This was never just a business for us,” Michael Kanter said of the store, which has grown into a US$3.2 million operation with about 20 employees.
“It was more of a larger mission to bring products and information to people to help improve their lives, offer solutions for health issues and to be active in the community. The transition is an attempt to keep that mission alive in some form for another 40 years. It’s exciting to think of it as a legacy, something bigger than we are,” he said.
The stakes are high. Retail Insights, a consulting firm in Brattleboro, Vermont, that specializes in the natural products industry, estimates that the industry has grown from about US$1 billion in the early 1980s to US$63 billion last year. Familial business transitions in many cases are fraught with obstacles. Tales are widespread of families split by generational succession battles, and the natural food and products industry is hardly exempt.
“There are more ways for it to go wrong than for it to go right,” Retail Insights president and founder Jay Jacobowitz said.
He estimated that one in five such businesses has a second generation waiting in the wings.
“So they are interested, but are they capable?” he asked.
In some cases, circumstances can interfere with such advanced planning. When Summer Auerbach’s father learned he had cancer in 2004, the family’s business, Rainbow Blossom Natural Foods Market in Louisville, Kentucky, which her parents had opened in 1977, was struggling financially. Auerbach’s grandfather reached her with a life-changing phone call.
“I was 22 years old, planning to go to graduate school, and I didn’t realize the severity of what was happening at home,” Auerbach said. “My grandfather said: ‘Your dad is dying; your grandmother is dying too. The family business is in financial trouble. Your family needs you.’”
This was a weighty responsibility for a young woman with entrepreneurial ambitions and no plans to join the family business. However, Auerbach went home thinking she would help out for a while and then resume her own business career.
Given the family circumstances, as well as the presence of newly opened Whole Foods and Wild Oats natural food markets in Louisville, Auerbach faced a daunting challenge, especially given her age and lack of experience.
However, she quickly displayed a natural flair for business, and her father, who eventually recovered, provided a steady sounding board.
He decided to start another business and told her: “You are so passionate about this and you’ve shown the leadership abilities. This business is all yours.”
Under Auerbach’s leadership, Rainbow Blossom Natural Foods not only recovered, but it even thrived. The company has grown to five locations and has more than doubled its sales.
“I had planned on going to grad school, but it never happened,” she said. “I’ve gotten a better business education by doing this.”
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