Judson H. Beamsley, for example, just got tired of being moved around. Three years at Montgomery Ward & Co., and six transfers. Two years at Speigel Inc., nine transfers. Starting Tek-Aids Industries Inc., a distributor of microcomputer products, was more than just a chance to cut down on his moving bills. It was a way for Beamsley to determine his own destiny for a change.
For others, control has meant having the chance to follow their own ideas with no one to stop them, and no one else to blame for failures. Craig M. Mascolo spent eight months in semiconductors at Motorola Inc. before the frustration drove him out to start his heavy-construction company. "You're never told your ideas are good or feasible or plausible," he remembers. "I like instant results, and they wanted me to put things into the system and let them digest." As he was preparing to launch his firm, Mascolo lives for six months on unemployment checks and his wife's modest salary, waiting to get his first break."But at least it was my own choice," he says.
It is one thing to control your own ideas and time, however, and quite another to keep control when you create a business. But as a group, the INC. 500 CEOs did everything they could to keep power to themselves. They started modestly, 60% of them raising less than $10,000 in seed capital, most of it from personal savings. Only a handful of them used venture capital, the vast majority preferred taking on debt rather than giving away equity. The typical chief executive kept a majority position -- and 41% owned the whole thing.
The need for control may help explain the ambivalence that these business people have about partners. Over two-thirds started with a partner, most often one or two colleagues who together held a minority position. In 8 out of 10 cases, the partner is still involved in the business today. But few subjects elicited so much advice from the CEOs we surveyed, or provoked so many horror stories.
"If partners are required for financial or emotional reasons, choose very, very carefully, because a divorce in business is just as traumatic and expensive as a personal one," says James P. Gore of Avtec Industries Inc., in Fairfield, N.J. The problem is finding partners "that will complement and contribute," warns Donald L. Eberly of Qualimetrics Inc., in North Highlands, Calif. Others point out that partners may not share your passion, work habits, ethics, or management views.
Before he started manufacturing kitchen-ventilation equipment, Robert L. Luddy had been forced to dissolve a fiberglass company because of "bad blood" between him and a former partner. Luddy had run the business side, and his partner had been in charge of technology, and never the twain did meet. "He'd say, 'We need a bigger plant," Luddy remembers, "and it was hard to explain to him why that wasn't good for the business." Luddy has decided that working in tandem was no better than working for someone else. "If I have to be encumbered with a partner, then I'd rather not do it," he explains.
Edward J. Yohman started an electric equipment manufacturing firm with a group of "nine guys, all amateurs," and remembers the early years as a nightmare. With 10 equally loud voices to listen to, all representing a financial stake, there was a lot of squabbling and very little flexibility or responsiveness. Three dropped out of active involvement when the game got risky, then one of them "later decided to come back in when the going was good." Yohman eventually bought him out. But if Yohman ever starts another company, he'll insist that any partners sign a buyout contract to make the inevitable parting less painful.
Now that their companies are growing and relatively successful, CEOs no longer feel quite so indispensable as they once did: half say they have at least identified a potential replacement inside their organizations. They put in less time at the office -- on average 54 hours per week -- which is down an hour a year on average for each of the 10 they have been in business. And although they claim to take off 15 days each year on the average, for most it has been a year since they had a solid week away.
The challenge now is to learn to let go a bit, to share ideas and let others share in the responsibility. Although only 15% say they think it is "very likely" they will turn over day-to-day control of the company in the next year, half hope to be able to delegate more responsibility to their employees. But delegating, they say, proves easier to praise than practice, particularly when you're convinced you can do the job better yourself.
Donald B. Peschke of Woodsmith Publishing Co. has managed to let go of accounting and finance, but keeps his finger in everything else. "I want to be publisher and editor," he admits. "I still do all the writing and half the editing. I want to keep the marketing, too."
"When I think of changing, it gets down to what's going to cause me more grief, to make the change or keep the statuts quo," says Joe M. Thacker Jr., a jewelry manufacturer. For now, it's an easy choice, "but latter, maybe, I'll feel more like stepping back."
Aaron Zohn warns of the dangers of waiting too long for later on. Zohn remembers how stifled he felt as a vice-president and minority stockholder in a graphic art and typesetting business years ago. Now that he is running his own company, he wonders how he can keep good people productive and content if he continues to make all the decisions. How can he keep them from going out and starting a company of their own, just of he did? "That is something I'm still trying to work out," he admits.
One answer favored by management experts is the sharing of equity with employees. But only 27% of the INC. 500 CEOs have given it a try. Herbert Antone, who runs a computer-service firm in Pleasanton, Calif., speaks for many when he talks of the fear of having employees peering over his shoulders all the time, thinking they have a say in how the business should be run. Adds Charles T. Stumpf, an insurance broker in Overland Park, Kans., "I took the original risk, it was all my capital. Besides, there are other ways to reward people besides giving them the store."
Most of the INC. 500 companies have been approached by potential buyers, but only the older chief executives believe it is likely that they will sell their businesses within the next five years. Even fewer will consider going public.
