It can happen to any family business: the unexpected illness, injury, or death of the owner/manager. The sudden removal of the dynamo at the heart of the business—the leader who makes financial decisions and is the key contact for vendors and customers—can leave a void that’s not easily filled.

What does a family business do? Who takes over? How does the store hold on to customers and prevent the crisis from overwhelming the business?

Tom Cook Jeweler, a successful, $2 million, family-owned business in Daytona Beach, Fla., faced this problem not once but twice within four years. The story of how the firm weathered two unexpected storms provides lessons that can help other family jewelers cope with such a crisis. Current company president Sheryl Cook shared that story with JCK.

We also got some advice from the experts: Deborah Taylor and John Gardner, wealth management advisors with Legg Mason Wood Walker, a leading financial services company, and Steve Hegg, senior vice president of Business Resource Services, which assists many small businesses with financial and business services.

A family tradition. Tom Cook Jeweler is the classic family jewelry business. Great-grandfather Vaclav J. (“V.J.”) Pekor started the tradition in 1862 as a teenage apprentice to a jeweler in Columbus, Ga. By the early 1900s, he owned one of the largest stores in town. Grandfather Tom Cook married V.J.’s daughter and went to work in the family store during the mid-1920s. In 1947, after taking over the business, he moved it and his family to Daytona Beach. Tom Cook Jr. grew up in the business and even met his future wife in the Florida store, when she came in as a customer. He took over the business in the 1960s, and his daughters—Vicki and Sheryl—grew up in it.

“The store was always part of our family heritage,” recalls Sheryl Cook, who joined the business full time in 1980. “I remember making bows for a penny each when I was five. When we got to high school, Vicki and I worked here on weekends, and when we got our first cars, we paid for the gas by doing deliveries for the store.”

By the 1990s, Tom Cook Jeweler was well-established in Daytona Beach. It had a staff of eight and did almost $1 million a year under the leadership of Tom Cook Jr., by then president and general manager.

Then the unexpected happened.

One Friday morning in March 1991, Tom Cook Jr. left for a routine medical exam. When he returned, he called Vicki and Sheryl into his office and told them he had been diagnosed with colon cancer. He had emergency surgery the following Monday “and basically left the company,” says Sheryl. “It came on us so suddenly, and for a while we didn’t even know if Dad would survive.”

Cook was away from the business for almost 10 months, during which time he underwent experimental chemotherapy. When he did return to the store—during the 1991 Christmas holiday season—it was on a part-time basis, and he never returned to full-time leadership of the business. Once the initial shock of Tom’s illness passed, the family’s thoughts turned to the business. Sheryl remembers thinking, “Holy cow! He’s our No. 1 salesperson. How will we make up the sales? How will we make payroll? How will we continue to pay our vendors?” There were no easy answers. She was later able to phone her father during his recovery on his “good days” to ask for advice—but “there were a lot of bad days when I had to wing it,” she says.

Almost exactly four years later, in March 1995, another crisis hit: Sheryl Cook, now in charge of the business, fell down a flight of stairs at the store and badly damaged her shoulder. It required three separate operations, and her surgeon—who had treated pro football players—told her it was one of the worst shoulder injuries he had seen. The operations and subsequent therapy and recovery kept her out of the store for weeks. Here’s what the Cooks and their staff did—or should have done, according to the experts—to keep the family business on a steady course.

Lesson 1. Immediately inform the important people. After Tom Cook told his family about his cancer, he and daughters Vicki and Sheryl shared the news with the store staff, most of them longtime employees. They and some of the staff wept as he told them that he had cancer and was turning over the running of the business to Sheryl and Vicki. “We asked them to pray for my dad but said we had to keep the business moving,” says Sheryl.

They told them how much they were depending on their continued support and efforts, she recalls. “I told them I didn’t want to let anyone go, but that we would have to step more lively” to maintain business and meet expenses.

Second, Sheryl called “all our suppliers to whom we owed money. It was March, and a lot of extended terms were coming due. I told them what had happened and was honest and upfront about it. I told them we didn’t know how long my father would be out, and we asked them to work with us.” The vendors were supportive. Many even offered to send money or provide merchandise on memo so the store wouldn’t have to pay right away.

Lesson 2. Don’t let misfortune disrupt operations. Tom Cook’s illness was not publicized. “We continued operating our business as though nothing happened,” Sheryl Cook says. “We didn’t want to worry our customers or vendors.

“Picking a jeweler is like going to a doctor or a lawyer,” she explains. “Many customers feel comfortable working with one person, the same person, especially in a family business. And my dad had waited on a tremendous number of people during his time. We didn’t want to lose those customers because he wasn’t there or have people think the store was going to go downhill because he might not come back.”

In some ways, the business was prepared for the crisis. For example, a line of credit had been previously secured by Tom’s signature. There were buy/sell agreements between father and daughters for disposition of the business, and legal documents stating who would be president when he retired or if anything happened to him.

What the experts say: Lessons 1 and 2 are the right things to do, says John Gardner. “Appearance is important. If you have a good succession plan in place (see sidebar) and are operating a successful business, you must make it clear that whether the reason [for the boss’s absence] is temporary or permanent, that it is business as usual.” And informing the staff and other contacts as soon as possible “legitimizes the transfer” of authority, he notes, even if it’s temporary.

The list of important people to contact should include your banker, adds Steve Hegg. “Some bank contracts, especially loans, are written to come due at the death of the owner. So, the bank should know who the key people are and be assured they are able to fill in the gaps in case of a serious illness or death.”

Lesson 3. Have a designated replacement. Both Sheryl and Vicki already were officers of the family business. Their father was president, their mother Gloria was secretary, Vicki—the older sister—was vice president, and Sheryl, who delighted in details, was treasurer.

It was long understood within the family—indicated by Tom to the staff and longtime customers as well as stated in legal documents—that whichever sister was working full-time in the business when he retired would assume the presidency. Increasingly, it became apparent that it would be Sheryl. Vicki, married and the mother of two, lived several miles away in Orlando and could work only part-time in the store. However, despite the buy/sell agreements and other legal documents, the store had no business plan covering emergency situations.

After her father’s surgery, Sheryl moved quickly to strengthen her store’s operations in case of another unexpected calamity.

She hired a sales manager (formerly with a large chain) and trained him as her backup. “I had been my dad’s support. Now that I was suddenly in his job, I needed a ‘me’ for my backup, to deal with salesmen, training, and advertising. I needed someone I could rely on who knew the business, would be there full-time, and would be in charge when I was out sick or away.”

Sheryl delegated more of the store’s operational duties to the staff. Everyone got a job description and specific areas of responsibility. For example, one person’s duties now include maintaining inventories of boxes and bows, and another oversees shipping and display windows. “It makes it easier for everyone—if something happens—when the duties are spread among the staff,” Sheryl says. “Each person knows what to do, and the business won’t be interrupted.”

She also increased her staff’s training in selling, “working with every employee who needed it. We needed to close every sale. We did more in-store marketing to build sales and gain new customers, and service to our customers was paramount.”

Finally, Sheryl drafted a business plan, putting into writing the store’s mission, each staff person’s responsibilities, and what to do in case of emergencies or unexpected occurrences.

What the experts say: “A jeweler should begin to groom a successor—or at least someone who can take over the business when he or she is away for an extended period of time—as soon as possible,” says Gardner.

“You need someone who understands the business and its requirements to the same degree you do, even if they don’t have the same experiences as you,” agrees Hegg. “A jeweler often only looks for another good jeweler to replace him, but what he needs is someone who also understands how to do business, how to buy and sell. He has to train that ‘someone’ in what to do so they can step in when needed.”

Taylor says that if the successor or replacement is a family member, all agreements should be documented. “There may have been a family dialogue about who does what, but if no one puts it down on paper, anything can happen when the time comes. The owner may want to have his daughter Susie run the store, but if something happens to Dad, and brother Johnny comes back from touring the world and wants to be compensated immediately, what happens if nothing is in writing?”

If possible, suggests Hegg, the jeweler should develop “a management team—even if that means only a couple of key people—who can take over when he’s away. He can test them by going away for a couple of days to a trade show and then by taking a vacation. The biggest test is if you can leave and they don’t have to call you unless it is a true emergency. That shows they’re ready to step in if anything happens.”

Lesson 4. Share business information now. Like many business owners and managers, Tom Cook Jr. had kept much of the business “in his head.” As a result, even though Sheryl had worked full time in the business for 11 years, there were some aspects of the business about which she knew little or nothing because her father handled them.

“Suddenly, I was in charge of something that I didn’t one hundred percent know or understand,” recalls Sheryl. “I wasn’t trained in diamonds yet and didn’t know how to do the buying. My dad had done much of the buying and selling of merchandise, and other things that no one else [in the store] did. There were matters involving key vendors, personnel, management routines, and deadliness—such as what documents to file quarterly, when to order Christmas packaging, or ‘tricks of the trade,’ such as ordering new inventory so it arrives after the start of a new fiscal year [and] won’t be taxed in the old one. We had never expected my father to leave so suddenly, and when he did, we found out how much he had done himself—far more than we expected.”

What the experts say: “One reason why independent businesspeople are independent is that they enjoy the freedom [that] being their own boss brings,” says Taylor. “They are chief executive officer, chief financial officer, leader, trainer, manager, referee, window cleaner, and trash man!” But that is a detriment to their business and to their staff and successors.

“In many smaller independent businesses, the owner is Dad, and Dad is the one who makes all the big decisions, approves the financial statements, negotiates contracts, and is the main contact [for suppliers],” notes Gardner. “But he keeps all this business stuff to himself, because he doesn’t think he will ever get sick or die. He may have some family members in the business, but they aren’t in key roles, or their roles haven’t been thought through. So the owner carries all this information in his brain—and that puts his staff and successor at a disadvantage if something happens to him.”

Lesson 5. After a calamity, establish who’s in charge. The Cook jewelry store had always had a family member—usually Tom Cook Jr.—on site for customers to talk to. After he became ill, his daughters maintained the tradition.

“When people came in asking for Dad, our staff was instructed to say, ‘Tom isn’t here, but his daughters Sheryl or Vicki are. Let me get one of them for you,’ ” says Sheryl. That established that the store was still a family business, she says, and indicated informally who among the staff was the key person or persons in charge.

What the experts say: “A business, to many people, is the owner,” says Gardner. “They come to the store looking for him or her. So, the owner should be acquainting them with his backup or replacement, telling them, ‘Here is someone I love working with, who I am bringing in [to succeed me]’ while they have time to do that.”

When he began to recover, Tom took Sheryl to the Jewelers of America show in New York City, then the largest trade show in the United States. He introduced her to the store’s primary vendors. “He did that so they and I could put a face with the name, and they could help when needed,” says Sheryl. “That was helpful, but it was something we should have been doing all along.”

What the experts say: “The owner of a family business should be taking family members [who work in it] to business conventions and trade shows to introduce them to key contacts, especially if they are the obvious successors,” says Gardner. “An owner’s Rolodex may have a list of important contacts, but his successor needs to put a face with the name, and [the contacts] need to know who to call and who is in charge.”

Lesson 6. Don’t become a stranger. When Sheryl’s accident happened in March 1995, the negative consequences for the store were nil, thanks to actions and procedures instituted after Tom Cook’s surgery. But Sheryl Cook says her accident offers two more lessons for any family business owner or manager laid up by a non-life-threatening illness or accident.

First, get back to business as soon as reasonably possible. During Sheryl’s long convalescence, her father came back to help oversee the business. But by then he was looking forward to full-time retirement, and the store’s staff needed a full-time boss. Her father called her after a few weeks and said, “You’re president of this business. Come back to work. I’m leaving for North Carolina.” At the time, she was upset. “I was still hurting and on medication, but it was the kick I needed,” she says now. “That got me motivated to go back to work.”

The longer a business owner is away from the store, “the worse it becomes for you, the owner, because you lose momentum, and your absence affects the confidence of customers and vendors,” she says.

A prompt return after a reasonable convalescence is also important for the staff, she says. “They are capable and well-trained, but they aren’t paid to be the store’s operator and [handle] extra work and responsibilities indefinitely. That’s not fair to them. They need to know the boss is coming back or be in regular contact with him or her, to get his or her opinion, leadership, and guidance.”

And it’s important for customers, vendors, and staff to see members of the family business in the store, she says. “It’s like going to a doctor. If you see his assistant once or twice, that’s okay, but if he’s never there when you need him, then his patients move on to someone one else … and so will your customers if you stay away too long.”

Lesson 7. Be prepared. Calamities are reminders that “anything can happen to anyone anywhere, and anyone can be replaced,” says Sheryl Cook. Be prepared for the unexpected she advises, “because you never know what will happen.”

“Family Business in Crisis” is a recurring series spotlighting real jewelry store families and how they handle serious problems that can affect any family business.