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GROWING FAMILY FINDS HARMONIOUS WAY TO PASS ON GROWING BUSINESS

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Dec 12, 2010

 

By JAN FALSTAD

Of The Gazette Staff

| Posted: Sunday, December 12, 2010 12:15 am

It took nearly two decades, but the expanding Gainan family has worked out the tricky personal and financial challenges to turn over the family business to the third generation and, in a few more years, start training the fourth generation.

On Dec. 1, all the paperwork was signed to transfer ownership of Gainan's Flowers and Garden Center to Mick and Lynnette Gainan and their two children, Jim Gainan and Kristen Gainan Graves.

The deal could have gone either way with Mick's brother, Chuck Gainan and his family, buying, instead of selling, the business.

But Chuck Gainan, who has been president and chief executive, his wife, Karolyn, who was the top buyer, and their two children, Kara Dahlberg and Todd Gainan, sold all their stock to the other side of the family in a lengthy, but amicable, transition.

Mick will continue to manage the Heights Garden Center and is now chairman of the board. His son, Jim Gainan, became president of retail operations.

“We're not changing anything. It's been very, very successful,” Mick Gainan said. “But we have some thoughts on expanding on some lines at the stores.”

The two sides of the family will continue 50-50 ownership in the family's wholesale flower business, Big Sky Floral Supply LLC, which also owns all the land and buildings occupied by the three Gainan's stores on the West End, downtown and in Billings Heights.

Seven years ago, Gainan's started a wholesale flower business to eliminate middle-man costs and to get fresher flowers. Flowers are flown from the farms in Columbia and Nicaragua to Miami, clear U.S. Customs the same day and then are loaded into refrigerated trucks headed for Billings. Big Sky Floral sells flowers wholesale to other U.S. flower shops, through the Billings stores and on the Internet, which now is 6 percent of sales.

In 1951, Grant Gainan quit a perfectly secure city job as a fire marshal to start the floral and garden business with Betty “G'ma G,” his wife. Their two sons, Mick and Chuck, grew up with the store and, except for serving in the U.S. military, have worked there all their lives.

All four children in the third generation have worked in the business for nearly two decades, learning management skills from Mick, Chuck and Karolyn. The fourth generation has 10 more Gainans, with the oldest a high school freshman. So, it was time to execute a transition plan that the family started in 1991.

Expanding across Montana was too risky, they decided.

“Without rapid, possibly irresponsible multi-city growth, we simply do not have a business large enough to support that many people,” Chuck Gainan wrote in a letter to key customers and friends.

Other family-owned Billings businesses such as Epcon Signs, Pierce Flooring and Macon Supply expanded to other Montana cities and moved relatives there to run the stores, Chuck said. But that was easier 10 or 15 years ago when land values were more affordable, the economy was strong and there were fewer retail stores.

Last May, the family started the process of determining a sales price with the goal of completing the stock sale this tax year.

“We were sitting there not knowing for sure which side would be the purchaser or the seller, we just wanted to get it valued,” Jim Gainan said.

Chuck's side of the family offered up their stock for sale first, he said. The sales price and annual revenues were not released.

Chuck and Karolyn's children will continue to work at Gainan's, even though they no longer own stock. Kara Dahlberg is a part-time buyer and Todd Gainan will continue to help with holiday planning and some other operations.

Although he is past retirement age, Chuck Gainan has the business lodged in his DNA by now, so he will keep working out of his downtown office. But he has handed over the day-to-day operations mostly to his nephew, Jim Gainan.

“I told him if he was 90 years old walking around telling me I was doing things wrong, that was perfectly fine with me,” Jim Gainan said.

The stores will add some new products and try to boost sales of fresh flowers in Billings, which lag behind floral sales nationally.

“In Europe, you wouldn't even think about setting a table without a fresh flower in a vase,” Jim Gainan said.

During some tough times after the business was started nearly 60 years ago, Grant and Betty Gainan rented out their house and lived in the store for two years with their young sons.

“Being financially responsible and avoiding a load of debt for the business saw us through some tough times and that's probably the only reason it survived,” Jim Gainan said.

The family announced the transition to about 90 employees at a dinner Dec. 2 and pledged to keep sharing their 100 years of combined experience.

“The six of us have each other on speed dial and we don't expect that to change,” Jim Gainan said.

Contact Jan Falstad at jfalstad@billingsgazette.com or 406-657-1306.

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