Only 30% of family businesses continue into the second generation. One reason for this is that nearly half of executives who expect to retire within five years have no successor.
Used clothing retailer Buffalo Exchange bucked that trend in 2024 when Rebecca Block became CEO. Brock’s parents, Kirstin and Spencer, started the business with a single store in Tucson, Arizona, in 1974, when the used clothing market was still in its infancy.
“Over the past 50 years, the whole concept of recycling and used clothing has changed a lot,” Block told Yahoo Finance. “People don’t see second-hand clothing as a stigma. They see it as a source of pride.”
The buy-sell retailer has grown in popularity with the industry, expanding to 41 locations in 15 states and generating approximately $100 million in annual revenue.
During the same period, the company has successfully navigated the concept, launch and growth stages of business formation. These days, entrepreneurs are entering a transformation or exit stage where they consider whether to retire, sell their business, or hand their company over to the next generation.
As Brock plans the company’s future as a second-generation owner, he will combine what has worked in the past with the latest data to make important decisions, such as choosing a new store location.
“We try very hard to be in a community with a lot of students, but then we look for places that look like an alternative,” Block said. “We moved into looking at demographics to understand who our customers actually are based on store, so we can look for those demographics in other regions as well.”
Block is also working to modernize Buffalo Exchange to counter the rise of digital players in the recycled fashion market. The company tried to sell clothing online three times, but Block said it wasn’t economical for the business. Instead, the company decided to rely on its brick-and-mortar identity.
“When you’re online, you don’t feel like you’re experiencing anything,” she says. “You’re looking at an object, but you’re not actually touching it in a fun environment and having a sensational experience.”
Buffalo Exchange’s mother-to-daughter handover officially took place in early 2024, but the handover process took almost a decade, said Thomai Serdari, a professor at New York University’s Stern School of Business. , a strategy that generally leads to a smooth handover.
“It’s always better to take the time to develop a succession plan and ensure the new generation has peace of mind,” Serdari said.
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