SOUTHERN CALIFORNIA ENTERPRISE : A Family Affair : Keeping a Business Among Kin Can Be Rewarding, Though Not Easy to Do

Just another roach exterminator to you, maybe, but to owner Herbert Pencille, Hydrex Pest Control in the east San Fernando Valley is a generational saga. Get past the antiseptic name and the firm’s unpleasant but necessary function and you’ll uncover the dreams of Pencille’s grandfather, the untimely death of his father, and a turning point in his own life when, at 22, a calamity left him in charge of the company.

So it’s natural that Pencille, now 68, would have asked both a son and a stepson to take over the North Hollywood franchise and carry it on through the fourth generation.

Natural, too, is the disappointment he felt when both declined.

The fact is, Pencille’s business was already beating the odds. Efforts to keep businesses within a family usually fail. It’s believed that less than a third of family businesses that are passed on make it past the second generation, said Judy Harman, associate director of Cal State Fullerton’s Family Business Council. Only about 5% survive to the fourth generation, according to a study by Massachusetts Mutual Life Insurance Co.

That notwithstanding, the temptation to mix loved ones and business remains strong. Indeed, most businesses are family businesses. For small firms, family involvement gives the business a heart and fuels devotion to the tough and dreary work it sometimes takes to stay afloat.

But as Pencille also found out, the thread of family ownership is fragile even when it’s long. Children leave. Siblings fight. Routine decisions are complicated by old hurts.

Across Southern California, an entire generation of post-World War II entrepreneurs is reaching retirement age. A whole new assortment of sons, daughters, in-laws and issues are on deck.

That’s meant lots of business for Lee Hausner, a Burbank family-business consultant who is also a clinical psychologist. Hausner calls these elder founders “cowboys” and says they have different values from business-school grads and heirs-apparent coming in. “It’s often a very bumpy transition,” she said.

Pencille says he’ll probably sell his pest control company.

Whoever buys it, of course, is unlikely to share longstanding family sentiments about the business.

When Pencille’s grandfather got started in 1908, pest control was a matter of holding one’s breath while stirring mixtures of sodium cyanide and sulfuric acid in buckets.

When Pencille worked in the business as a child, cyanide gas was still used. It worked fine, as long as you hustled, he said. “You had a minute or two to get out the door. . . . It was kind of exciting.”

This was the gas Pencille’s father was using in 1947 when a house he had just fumigated exploded--probably after being struck by lightning. Chester W. Pencille was in a coma for months, and he died two years later. Young Herbert Pencille built the business back from financial ruin: At one point, he was forced to close its doors, but he was able to immediately start it up again with a new name.

But by the time it was his own sons’ turn, things had changed. One son, Brian Pencille, worked for him for 20 years before saying that he did not want to stay. Pencille says he’s not angry. But, he added, “it was kind of a shock.”

“I feel sorry that I let him down, but I have to make my own decisions in life,” said Brian, 42, who is starting his own window-cleaning firm in Grants Pass, Ore. He said he is grateful to his father but that he was tired of Los Angeles, tired of pest control and wanted to do something else.

Giving up control to a stranger can be hard, but keeping a business in the family can be harder, said Steven Gal, an associate professor at USC and director of the university’s Family Business Program. Typical problems include an elder founder’s being reluctant to turn over the reins, overzealous spending by heirs and squabbling among siblings, who often find it harder to work for one another than for their parents.

“It’s like a bad marriage,” said Todd Dillmann of his relationship with elder brother Craig Dillmann. No parents are involved in their business, Canoga Auto Body Inc. in Canoga Park--just two brothers who don’t get along. “I have to sit next to him all day; I don’t like going over to his house anymore,” Todd, 35, said.

Craig, who’s two years older, concurs. His brother differs from him in business matters as well as personal ones. “If he was just an employee, you could tell him to do whatever you wanted. With your brother, you have to be more cautious,” he said.

Despite these gripes, business at the Dillmanns’ auto body shop is booming. The brothers started doing the work in their parents’ garage--Craig did the body work; Todd painted. Their 6-year-old shop now has about 24 employees, and yearly revenue is around $2.5 million. They recently expanded, and the phone rings constantly.

The key to making it work, by both men’s accounts, is Craig’s wife, Juanita, official part-time receptionist and unofficial peacekeeper. When decisions come to a vote, it’s usually Juanita who breaks the deadlock, often siding against her husband, the brothers say.

At Art’s Delicatessen & Restaurant in Studio City, holding the family business together has required not just the help of a lawyer and an accountant, but a therapist as well. Founder Art Ginsburg, 60, said counseling sessions have helped him, wife Sandy, son Harold Ginsburg and daughter Roberta Mitteldorf resolve problems he said arose from power struggles and sibling rivalry.

“There’s a fine line there--in working together but not being the parent and not being the child,” he said. “Your roles reverse back so frequently and innocently, you don’t even realize it’s happening.”

Roberta, 29, said conflicts still come up. There was that bit with the pickles, for example. Roberta had time off work, and someone--it wasn’t clear who--changed the spice recipe for the pickles, an area Roberta considers her responsibility.

“I tasted the pickles and said: ‘What happened here? I’ve only been gone a month!’ ” recalled Roberta, who had the recipe changed back. Trivial perhaps. But the recipe switch left a shadow long enough for both father and daughter to mention it independently weeks after the incident.

Personality and generational conflicts can also lead to improvements.

At Canoga Park Heating & Air Conditioning Co., founders Bob and Mary Wiseman are in the process of handing over the business to their sons. The couple are self-starters who began the business in their garage. Their son Bob Wiseman Jr. went to college, traveled in Europe and got an MBA from Pepperdine University. One family, two worlds.

“Bob said we have to have a fax machine. I said, ‘What’s a fax machine?’ ” said Bob Sr., who adds that he has learned to like the contraption. Bob Jr. and his half-brother Scott Davis also introduced computers and phone improvements, recently upgrading them over their father’s objections. “The computers are really good; it’s just hard for my husband and me to accept them,” said Mary Wiseman, 64, who did the bookkeeping by hand for decades.

Despite difficulties, family businesses tend to be more competitive, more ethical, more devoted to community service and more considerate of employees than non-family businesses, experts say.

“When they don’t work, it’s the most distressing situation imaginable,” psychologist Hausner said. But when they work, “they’re the best.”

That’s true on a personal level as well. Although most of the family members interviewed here complained of feeling stifled and frustrated occasionally, nearly all also said they are basically happy.

And no wonder. Consider Mr. B’s Flowers in Canoga Park, founded by Lorraine Hasson, 62, and her late husband. Today, her daughters, Beverly Ing and Yvonne Green, manage the shop. Hasson does the bookkeeping, and both daughters’ husbands work there.

Many working parents might envy the setup this family enjoys: When Beverly’s son, now 16, was born, she didn’t have to worry about day care. She simply hauled a crib into the shop and went to work. Nowadays, schedules are arranged around Little League games. Lorraine Hasson says her friends tell her she’s lucky to see her kids so much.

At Art’s Delicatessen, Roberta Mitteldorf’s 2-year-old daughter and 6-week-old son accompany her to work. She nurses the boy while taking orders on the phone and hands him to her father to burp when she’s off doing something else. “I didn’t know this is where I was going to wind up, but now that I have done this, I couldn’t see myself anywhere else,” she said.