ONE OF THE great advantages of running a third-generation business is the knowledge that, no matter what challenges are thrown at you, the business has most likely survived tougher times in the past.

Just ask Peter Flanagan, head of furniture dynasty Flanagans, which was founded in Derry in the 1940s by his father James.

The obstacles overcome by Flanagans during the Troubles make the current economic woes seem like a walk in the park.

Incendiary devices were regularly planted in their shops and one store was burnt out when a petrol bomb was thrown through the window during a riot.

"That was common in those days that places were burnt out," Flanagan observes stoically, sitting in his office in the business's showroom in Dublin's leafy Mount Merrion suburb.

The family made the most of the opportunities at the time, however, buying up army surplus furniture at a snip from the British. On one occasion, they bought up the contents of the MI5 headquarters on the Thames.

Flanagan recalls being warned not to utter a word while in the MI5 office, as his accent would alert the suspicions of the agents working there.

Perhaps it was these formative experiences that gave Flanagan his philosophical outlook on business.

"We're more affected by our own action or inaction than we are by external circumstances," he says. "So what we do here now today in terms of planning or action is going to have a much greater influence on the outcome than fretting about external circumstances."

This philosophy is evident in the development of the family business, which has had to adapt over the generations in response to market conditions. His father specialised in selling second-hand and antique furniture. The mantle of responsibility then passed to Peter's older brother Brian, who began expanding the business's repertoire to manufacturing high-quality furniture in its facility in Buncrana, Co Donegal.

His vision was to produce distinctively Irish handmade furniture. This became an increasingly difficult task over the last 10 years, however.

It proved almost impossible to find people willing to take up apprenticeships in cabinet- making, upholstery and so on, when they could earn almost €1,000 a week on a building site. More recently, the demand for big-ticket handmade pieces like boardroom tables has dropped away.

"We were manufacturing a lot more 10 years ago than we are now. Just in the last 12 months we've had to scale back the manufacturing side of the business, regrettably."

The company was also doing a decent trade in fitting out buy-to- let apartments for investors, but this has shrunk away as well. The focus now is on the retail side of the business, helping people who perhaps don't have the resources to trade up, to redecorate their existing homes.

Beautiful, distinctive antique pieces that would no doubt fit with the décor of the surrounding residences still take pride of place in the Mount Merrion showroom. But a trip up several flights of stairs in the former cinema building reveals that a wide range of contemporary furniture is now available, clearly targeting the starter home market.

In addition to tailoring their range to suit market demands, they've also taken the audacious move of launching a new store in Sligo. It opened its doors last week. Fortune is said to favour the brave, but given the current environment is this a step too far?

"There's always a demand for furniture," Flanagan says, with a confidence borne of surviving the 1970s. "If you can move fast enough and quick enough and adapt, you can tailor your offering to the demand fairly easily."

They also have the upper hand on many other furniture purveyors that expanded rapidly during the boom times and who are now suffering sleepless nights wondering how on earth they're going to meet the interest repayments on their properties.

Flanagans own their buildings outright, which gives them a major advantage.

Family businesses are notorious for infighting and power struggles. What's the secret to the success of Flanagans?

"Its not without its difficulties. Like any other family we have shouting and screaming matches but at the end of the day it's family," he says. "My older brother has been the philosopher at the head of the family for so many years. He's passing the mantle to me now and it's a question of keeping the communication lines open constantly . . . but ultimately the person at the head of the family makes the final call."

His nephews Christopher and Andrew have recently joined the management team and represent the third generation in the business. He warmly welcomes this infusion of new blood.

"It's fantastic to see them coming in with such enthusiasm," he says. "I suppose the bottom line is a shared philosophy. We see the family business as something that's been handed down, a sort of 'family silver' of furniture training."

Although it has often been suggested to him, he has never considered cashing in his chips by selling off the vast Mount Merrion property to developers.

In fact, neither he nor his brother Brian envisage retiring at all. "It'll be just a question of how many hours we are fit to do when we get to whatever age," he says, "and that we're not an obstacle to somebody else trying to push the business forward . . . We're furniture people to the core.