Father's sudden death leaves son to revive dad's dying business

Succeeding in small business

December 16, 1991|By Jane Applegate | Jane Applegate,Los Angeles Times Syndicate

David Haerle wanted to be a rock star. When that didn't happen, he got a job in the mail room at International Creative Management, the giant talent agency, and worked his way up to a job as an agent. At 24, he was booking engagements for major entertainers and looking ahead to a bright career in show business.

That all changed one night. In September 1990, while on an evening hike with his father in Griffith Park in Los Angeles, the elder Haerle suffered a heart attack and died on the trail. Martin Haerle was 51 and in seemingly good health.

After the shock of his father's death subsided, David Haerle spent a week sorting through his pain and grief before deciding to step in and take over his father's firm, CMH Records Inc., blue grass record company based in Los Angeles.

Like most small-business owners, Martin Haerle had no succession plan and had never talked with David about the future of his record business. Although father and son shared a love for music, and Martin sought David's opinion about a few songs, they had never worked together.

When David arrived at CMH's small office, he found a negative checking account balance of $16,000. Business information was scant because his father calculated royalty payments in his head and wrote every check by hand.

"I walked into a puzzle and began to put the pieces together," Haerle said.

Although he had never run a business, Haerle knew he needed time to figure things out. After dodging phone calls for a few days, he scheduled meetings and called all CMH's suppliers and distributors.

"I told the suppliers I couldn't pay them for six months and asked them to hang in there with us," Haerle said. "I said, 'I'm here, I'm real,' but there is just no money."

While a few creditors cut him off, others waited patiently for their money. To assure the industry that CMH was still a player, Haerle attended a blue grass convention and moved quickly to release two albums recorded before his father's death. He also relied heavily on Arthur Smith, his father's business partner and a veteran country music star, producer and composer.

"Martin's death was really untimely," said Smith, who owns 20 percent of the CMH Records. "I am really thrilled with the way young David stepped right in. If he hadn't, I'm sure we would have sold the business to one of our competitors."

Smith, who deals with the artists and produces records for CMH at his studio in Charlotte, N.C., said David Haerle has made some innovative and needed changes.

The most significant step was to hire a family friend to develop and install a comprehensive new computer system for the business.

"There was no way I could do things by hand the way my dad did," Haerle said. Spending money on the computer system put the whole company at risk, but, he said, "I figured if we were going down, at least I could say we fought a real fight."

Today, CMH Records is going up, not down. The company has seven employees and expects sales of just under $1 million this year. Now, Haerle says, his greatest challenge is learning to delegate duties to his staff after doing everything himself. He's also testing new marketing concepts, including budget-priced CDs and cassettes for recession-weary music lovers.

"My father knew more about country music than anyone," said Haerle, who admits he didn't like blue grass music until a few years before his father died. "When he and Arthur started the label in 1975, they signed up all the legends including the Osborne Brothers, Grandpa Jones, Lester Flatt, Mac Wiseman, Merle Travis, Carl Story and Eddie Adcock."

Haerle is happy that his father's passion for traditional American music taught him to appreciate it.

"If my dad were here to see what has gone on in the past year, I think he'd be totally proud and happy."

If you are interested in more information on succession planning, James Lea's "Keeping it in the Family: Successful Succession of the Family Business" (John Wiley & Sons, $24.95) provides solid planning tips, checklists and case studies. Lea recommends writing a marketing plan for your business so you can sell your family on the benefits of taking over when you are gone.

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