For a decade, high housing prices made it hard for people to stay in the state, even if they wanted to. But falling house prices and increased hiring are enticing former Californians to come home, moving company officials said.

“I think the people realize that when we move back to California, we’re never going to have interest rates or (house) prices this low,” said Linda Oakley, owner of Atlas Transfer and Storage Co. in Poway, affiliated with Allied Van Lines. “We want to live in California, where it’s warm and sunny and happy.”

Indeed, 2,926 more families moved into California than moved out of it, the third-highest figure of any state or Washington, D.C., according to the combined data of Atlas Van Lines Inc., United Van Lines LLC and Allied Van Lines Inc. For years, California had seen more households moving out than in. In 2007, Atlas’ data indicated that trend had reversed, but it didn’t turn around in Allied’s data until 2011.

U-Haul International Inc., which doesn’t provide the same type of data, said it helped move 5.6 percent more people into California than out of it, according to spokeswoman Ashleigh Wagner.

Wagner also had some local data from U-Haul: Between January and November 2011, it helped 1 percent more people move out of Escondido than in, it helped 1.9 percent more people move into Oceanside than out, and it helped 11.5 percent more people move into Temecula than out.

U-Haul, United and Atlas represent 40 percent of the moving market, and Allied is private so there is no market data available, according to Boston-based market analyst Pell Research.

By the raw numbers, California had the third-highest net gain of movers, behind Texas and Florida, but those are all states with large populations. When viewed as a rate, California ranks 13th, with 0.23 moves per 1,000 households. Washington, D.C., ranked first by this metric, with a net of 2.68 incoming moves per household, almost four times that of No. 2-ranked North Carolina (see this article online for the complete table).

Illinois had the highest rate of departing families among the 50 states plus the district, losing 0.91 families per 1,000 households. New Jersey and Connecticut had the next two highest rates.

California has long seen more people leaving the state as the cost of housing skyrocketed. By 2007, the median house price in North San Diego County peaked at $639,000, and it peaked in 2006 in Southwest Riverside County at $420,000, according to a North County Times analysis of transactions in the two counties. Those prices plummeted 38 percent and 50 percent respectively as a real estate bubble imploded and a recession pushed many people out of work. As of December’s data, the nation had added more than 100,000 jobs for six consecutive months, and that trend is reflected in California.

“We’re seeing corporations wanting to hire again,” said David Frank, vice president and general manager of the San Diego office of Alexander’s Mobility Services, an Atlas affiliate. “We’re seeing technology companies wanting to get ahead of the game. Even if they’re not selling product yet, they’re hiring designers and those kinds of jobs. We’re seeing Qualcomm, and Sony, and some of the other companies doing some of the hiring.”

Oakley and other local moving company officials said 2011 had been an up year. Oakley said her business was up 6 percent compared with 2010. Her company moves people all over Southern California, and she said she’s been bringing people in from out of state. Paula Nix, office manager for Eckert’s Moving and Storage in San Marcos, said business was up in 2011, including local moves, although not always for the cheeriest of reasons.

“A lot of them are losing their homes, or they’re just first-time buyers and they’re all excited about getting a new deal on their home,” Nix said.

Nathan Pletcher, an electrical engineer, has enjoyed the tech resurgence. On Friday, Linda Oakley’s movers came to take his belongings out of his Leucadia home to bring them up to Mountain View so he can start work for Google.

He originally came to California from the Midwest. Now he and his wife, Andrea, a teacher, have fallen for California.

“We both like California a lot, we like to do stuff outdoors, we like all the opportunities California offers, oceans and mountains and stuff like that,” Pletcher said the day before Oakley’s company came to take his stuff away.

Family-owned companies form the bedrock of the U.S. business community — especially the moving industry. Yet, leading a family-owned business, and managing the leadership transition from one generation to the next, can be challenging.

If you don’t think family businesses play a huge role in the U.S. economy, think again. According to Gaebler Ventures, a Chicago- based venture capital fund, despite the rising influence of big corporations, family operations continue to be a powerful economic force in the U.S. In fact, many big corporations themselves are family-owned.

Indeed, family businesses account for a staggering 50 percent of U.S. gross domestic product (GDP), Gaebler said. And while it’s tempting to believe that the majority of family business GDP is attributable to thousands of small operations, it’s important to recognize that 35 percent of Fortune 500 companies are family-owned.

That means family-based operations are represented across the spectrum of American companies, from small businesses to large corporations, the firm noted.

That’s goes double — if not triple — for the moving and storage industry, notes Linda Oakley, VP-sales for San Diego moving company Atlas Transfer & Storage Co., an agent for Allied Van Lines.

“Growing up in a familyowned business, we learned what it takes to be a leader and an entrepreneur in the moving industry,” she said. “Every night at the dinner table, we discussed the day’s business challenges, with topics ranging from the current price of fuel, health care costs and where interest rates were at. We watched our parents and their friends with family-owned businesses discuss customer and employee issues and listen to their solutions. Learning about the challenges at work came directly from watching and observing our parents and their owner friends.”

Oakley said that in a family-owned business environment there tends to be more resilience and ambition to continuously keep improving.

“A family business tends to want to keep their customers for life and we generate new business from networking around the family’s community,” she said. “We tend to have open innovation sessions to brainstorm new business ideas, solutions to ongoing challenges, while continuously adjusting to the current market conditions. In a family business, we trust and respect each other and work to understand each other’s strengths and weaknesses.”

And those traits provide a huge economic payoff for the country as a whole, according to Gaebler’s research. He said family companies are responsible for 60 percent of the nation’s employment and 78 percent of new jobs created.

The gap between employment and job creation figures may indicate that family businesses are one of the fastest growing sectors of the economy because their new job requirements outpace their current employment rates when compared to other businesses.

TACKLING TRANSITION

Often the biggest challenge for family-owned companies, both inside and outside the moving industry, deals with the tricky issue of transition — the movement of control and ownership from one generation to the next.

Gaebler’s research notes that only a third of all family businesses successfully make the transition from first- to second-generation largely because succeeding generations either aren’t interested in running the business or make drastic changes when they take the helm.

The significant failure rate of family transitions highlights a number of concerns about family businesses in general, including the ability of these organizations to maintain a consistent value system and business philosophy. This issue will come into even sharper focus in the coming years as baby boomers prepare to hand off their companies to their children, the firm says.

Linda Bauer Darr, president and CEO of the American Moving & Storage Association (AMSA), addressed this very issue at the group’s annual meeting earlier this year in Jacksonville, Fla.

“Perhaps the most important challenge we face is that of the potential leadership void we face as an industry,” she said. “President John F. Kennedy put words to this challenge expressing what I am sure many of you feel after years of hard work building your companies and coming to a time in your life when you want to pass the torch but suffer over leadership void. He said, ‘It is time for a new generation of leadership, to cope with new problems and new opportunities … for there is a new world to be won.’”

Darr said that for many family-owned moving and storage businesses, the time is drawing near for someone else to take the helm.

“Yet you can’t do that without being confident of their success,” she said. “Outside of the family succession model, we have done little to prepare our young workers for the leadership roles they will soon be asked to take. And, as an industry we have done little to recruit new workers. In the years ahead, we should look at this and start to craft a plan of how we can focus attention on our industry as a positive and promising field of work.”

It’s a challenge Atlas’ Oakley recognizes, too. “It is imperative that any family business implement a succession strategy. Without an effective succession strategy in place, an environment of confusion and complacency may result, thereby making it difficult for the business to develop, grow and be profitable,” she said.

“It is vital for the family members to talk amongst one another to set monthly and annual benchmarks to help foster both business, as well as personal goals,” Oakley said. “An effective succession strategy requires a clearly communicated and agreed upon vision for the business. Vision is essential as it provides the direction and guidance necessary to properly identify where the company is headed. A well-communicated vision addresses the company’s strengths and weaknesses, and it is a central component in any and all family businesses, not just our business.”

John W. Crane, of First Financial Group, a planning firm based in Reston, Va. And affiliated with Guardian Life Insurance Company of America, said the importance of a succession strategy for a family-owned business cannot be overstated. The value of the business, he said, can often represent the majority of that family’s wealth.

“For these families, it is even more vital for the family-owned business to have a succession plan in place, as compared to others,” he said. “If the value of the business goes down or even disappears, the majority of the family wealth will follow right along with it. Depending on the event, this adverse hit to the value of the business can happen quickly, without leaving much time to react or maneuver to protect the value.”

Crane also notes that Guardian, its subsidiaries, representatives or employees do not provide legal or tax advice, so consult with your attorney, accountant or advisor for advice concerning your particular circumstance.

TRANSITION TIPS

Oakley said one critical component in crafting a succession strategy is trust amongst the entire team.

“Most employees lack trust in their employer’s business, yet if a team trusts not only their employer, but their product and each other, they have a competitive advantage over their peers in the marketplace,” she said. “But a lack of trust may destroy a successful succession strategy. Family members work together for the business to succeed for the entire family, not just for the individual family members who are working there.”

A succession plan will fail, according to Oakley, if the leaders and family members do not make a concerted effort to discuss changes and obstacles arising from everyday life.

“As demonstrated by the last three years in the moving and storage business, the economy is a force that we have no control over,” she said. “But we can proactively make internal changes to our business plan that will have a positive outcome.”

Crane offers two important points family-owned moving and storage companies should consider:

First, make sure you establish what he calls a “fully funded” buy/sell agreement. “A buy/sell agreement is a legal contract drafted by an attorney that obligates surviving owners, or the company itself, to buy-out the interest of an owner who dies or becomes disabled,” he said.

“The buy-/sell agreement typically dictates an obligation for the estate of the deceased owner or departing owner to sell and sometimes, more importantly, to whom they must sell their ownership interest,” Crane said.

The agreement may also spell out other triggers, such as the retirement of an owner, the criminal conviction of an owner, and more, he said. “This agreement ensures that there will be a ready market for your business interest should you die, become disabled or otherwise leave the business,” Crane said. “The agreement also spells out methods to determine a fair price for your ownership interest.”

Second, make sure the business invests in insurance or massive cash reserves to fund the buy/sell agreement.

“Life insurance provides one way for a business owner to protect the current value of their business for its heirs and for the surviving owners/employees,” Crane said. “A family-owned business that is worth $10 million and has the value of that business fully insured through life insurance will be in the best position to meet the needs of the business and the needs of the family heirs in the event of the death of the owner.”

While no one likes to discuss their own mortality, such life insurance policies mean if the owner dies, the business receives a near immediate infusion of cash that can keep it running and deliver on obligations to the heirs.

“Without that near immediate infusion of cash, the business can struggle and the value of the business could drop to zero,” Crane said.

LOOKING FOR OUTSIDE ADVICE

Many family-owned firms are used to keeping things “in the family,” yet Oakley contends that it’s often advisable to seek outside advisors for tax and legal counsel, depending on the situation.

“They are another critical component to protecting both the family and the business,” she said. “Tax laws for estate-planning purposes are continuously being modified and it is impossible to know all of the changes without outside counsel. We recognize when there is something we don’t know, and we have to go out in the marketplace and seek professional help.”

If the intention is to eventually sell the business, then long-term planning gives the family an exit strategy, Oakley said. Furthermore, outside counsel may also be utilized to reinforce a family’s communication with one another.

At the end of the day, “Communication is the most important ingredient in a healthy, family-owned business,” she said.

“Making the time and make it happen is a significant component to the growth and profit of the family business.”

DAUGHTER TRANSITIONS

A recent trend worth noting is the increasing number of family-owned businesses that are being passed down to daughters.

According to research by Chicago-based Gaebler Ventures, over the past five years, woman-owned family businesses have increased by 37 percent.

There is also evidence to indicate that women-owned family businesses are better prepared for transition scenarios and have higher success rates than businesses controlled by their male counterparts.

SUCCESSION SUGGESTIONS

John W. Crane (www.cranefinancial.com), of First Financial Group, suggests several tactical steps family-owned moving and storage companies should adopt to help create a successful succession strategy:

Protect the value of the business. Imagine a family-owned business, built over 25 years, with Jim Smith, the family patriarch, at the helm. He has done all the right things. Well-known in the community, he knows all the local realtors and multi-tenant building owners by first name and is a very successful local area business. They seem to get business without even trying. Cash flow and profit for the business has never been higher, and as such, the business receives its highest valuation ever from a professional appraiser. Suddenly, the family patriarch and primary owner dies. The relationships built over 25 years … were these relationships with the logo on their business card, or were these relationships with Jim Smith? What is likely to happen over time if the business was really all Jim Smith?

Establish the true value of the business. For families whose total wealth is near the current $5 million Estate Tax Exemption threshold, it is important to establish the value of the business for Estate Tax Planning and to meet with a qualified Estate Tax Attorney. The business should be valued by an accredited and certified business valuation expert. The valuation document provided by an expert will provide documentation and rationale that defends the stated value of the enterprise. This valuation document could become a key component of an Estate Tax calculation, and if challenged by the Internal Revenue Service (IRS), could become a key component of the family’s case as to why they owe — or why they don’t owe — a stated amount of Estate Tax upon the death of the owner.

Keep cash resources available. Unplanned transitions are typically stressful because something unplanned has happened that is now forcing the transition, such as death, disability or lawsuit. If the family wants to keep the business running, large cash reserves may be needed to keep it afloat while they transition to life without the long-term owner at the helm.

Cash resources may be needed to deal with a sudden drop in sales, hiring a replacement for the owner or cash payments for heirs.

Equitable treatment of heirs. Let’s say the primary family owners have four children, with two involved in the business and two not involved.

How will the two not involved in the business be treated fairly? Ongoing cash payments? A lump sum payment up front? Will the business be able to make those payments?

It’s reasonable to expect the surviving heirs to have trouble getting along if they feel they were cheated out of their share of the inheritance.

It is far better to have those issues planned and stress tested by a team of experts before the event occurs.

Traci Rader

Thanks so much!
Kirin

I am sooo appreciative of the time you took and the great bits of knowledge you imparted — as well as your patience with what may have been dumb questions. Not to mention the very livable rate you quoted. And so I posted this on facebook:

Allied Van Lines – yay! $2412 guarantee from a good guy for my SAN-PDX move — with a few boxes thrown in for free – woo-hoo!

And I have decided I want your company to move me — but they better be as good as you say (lol). Just let me know the next step.

Thanks again,
Carolan

View Census Map

Quite Fascinating!!!
Just glide your cursor over the map and it displays every county. I can’t imagine how long it took to create this map!

San Diego California is a great place to move you and your family.