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Why Family Businesses Are Best

The competitive edge of family-run businesses.
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It might not be easier to run a business with family members. But whenfamily businesses work, they possess an inborn competitive edgeno other company can match

Forget for a moment everything you've read in Inc. about family businesses.

Forget the spousal cat fights. Forget the destruction wrought by tyrannical fathers. Forget all those battles waged by all those children trying to get their parents to view them as managerial peers. Sure, when businesses get messy, family businesses get messier than most. But the messy ones are the exceptions.

The rule, on the other hand, is this: a business run by a team of family members is more resilient and more likely to succeed than any other kind of company. Not as likely. More likely. For despite the sometimes emotionally taxing challenges of family-based management -- and no one is saying it's easy -- there are things about family businesses, about the ways they function internally and are perceived externally, that other businesses simply can't replicate. The result is that family businesses enter the commercial fray with a head start smart managers can exploit to keep them ahead. By their very makeup, family businesses have an unparalleled competitive advantage.

Here's why.

Familiarity Begets Speed
Family businesses have one indisputable defining quality: the individuals reporting to one another, confiding in one another, and growing the company together understand viscerally what makes their compatriots tick. Whether dealing with a sibling or a parent or a spouse, they know what inspires, what threatens, what elicits compromise. The best family businesses turn that understanding into an efficiency that breeds speedier management.

"We're absolutely faster," says Crystal Ettridge, who with her brother Steven has grown Temps & Co., a Washington, D.C., temporary agency, into a three-time Inc. 500 company with current billings of $32 million. "We have a telepathic relationship. We don't waste time."

For instance, when the company opened an office in Atlanta during a period of heavy growth in the late 1980s, and it floundered, Ettridge went to survey the situation and brought back the bad news. "I came home and said, 'Unless you are willing to move down there, or I move down there, it's not going to work. The staff we have is not prepared to run the office this far from home.' I told him my recommendation was to close it down. And the decision was made in, like, one minute. He said, 'Fine, it's closed.' And we moved to quickly cut our losses."

Ettridge says she pulls no punches in telling her brother what's good, bad, and ugly about his ideas. "It's just part of the dynamic we've had from growing up together. We don't spend a lot of time saying please and thank you, or typing up plans to present to each other. I think if you know how to utilize that undercurrent and knowledge of each other, you really can have the edge."

Paul Kennedy, president of Kennedy Die Castings, in Worcester, Mass., calls it a shared intuitive sense. "We can talk in shorthand," says Kennedy about working with his father and brother, who help run the company. "We can get things done in shorthand. The family-business structure can be amazingly quick-footed."

Leverage, Part One:
Family Members Have Star Power With Customers
Some customers don't want to speak to a nameless -- let alone faceless -- person in your operation. They want to speak to the person in charge. You know, the person whose name is on the door.

How nice, then, if there are 2, or 3, or 10 people in the company whose name is on the door. In the world of symbols and perception, the experience of dealing with a family member can reassure a customer as much as speaking with the one person who holds the title of president. Family members become a way of leveraging and multiplying a chief executive's presence in the marketplace.

Joseph P. Goryeb, who founded Champion Mortgage Co. as a sole proprietor in 1981, now shares management of the 143-employee, $21-million Parsippany, N.J., company with two sons and a nephew. His wife and daughter also are in the ranks. And he's found that the more people named Goryeb around, the better.

"I'm very, very visible on TV," says Goryeb. "I do all the commercials, and we're on television about 50, 60 times a day here in the New York-Philadelphia area. So everybody recognizes the name. And every time a Goryeb gets on the phone, the customers are impressed that someone at that level is handling them."

That response depends partly on each individual's competence. But Goryeb says the name alone counts for a lot. "I just brought my daughter on board," he notes, "and she's learning the business; her job is to send loans to different investors for preapproval. She's a Goryeb also, and I think it helps."

Last updated: Mar 1, 1992




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