A new survey shows family-owned businesses are flourishing despite a sagging U.S. economy. Their resilience is part ingenuity, part hard work, and all in the family.
A family business can be anything from a corner kiosk selling newspapers and phone cards to a giant corporation, like Mars, the candy bar maker, or Marriott, the hotel chain.
A new survey looks at the middle ground, a cross-section of 1,000 family businesses that are at least 10-years-old, and do at least $1 million a year in business. The survey was conducted by Mass Mutual Financial Group, a group of affiliated financial services firms.
According to Joanne Gruszkos, a member of the survey team, the average revenues of the firms surveyed rose 50 percent since 1997.
"Surprisingly, in this economy, family businesses are experiencing robust growth," she said. "Family businesses are finding that they are filling niche markets and, as a result, have been able to grow faster than some of their competitors."
Ms. Gruszkos pointed out that these smaller businesses typically create the most new jobs and are responsible for the growth spurts in many industries. She also says they are the most innovative. For example, they form "buying networks," giving them the ability to buy goods at a discount, and stay competitive with the large chains.
David Sterling, the chief executive officer of Sterling and Sterling, an insurance brokerage firm his grandfather started in 1932, said his company is thriving using similar networks.
"In my industry, we formed a cooperative with other agents like us all over the country, so that if one of my clients needs service in California, even though we're in New York, I have an affiliate in California to provide the service," he said. "So we've taken steps, and many family businesses have taken steps, to be resourceful so that these larger, conglomerate-type corporations can't compete with us. If all they can offer is price, we can now match it and they can never match our nimbleness or our service."
Besides agility, what gives family businesses an extra edge is the top management's close supervision and detailed knowledge of the entire operation.
David Sterling's father, Joel, retired in 1989 and sold the business to his son.
"In a family business, the leadership is very close to the lowest level in the business as well as the mid-level managers so they can guide the business much more closely and much more accurately," said Joel Sterling. "They have their hands in everything and they know what's going on."
David himself recalls that he grew up with his father's business.
"One of the things that shocked me when I came into the family business was how much I had absorbed through osmosis," he said. "Sitting at the dinner table listening to the stories my father would tell about his day or his week. You listen, or you half listen, and you don't realize what you're picking up. And my children, similarly, are more than likely picking up a tremendous amount. And that is what makes a family business that is passed on so rich in heritage, and so successful in many cases."
To Mr. Sterling, the success and failure of the family's business is personal: it has his name on the door. But, he says, at least he doesn't need to look too far to find a successor.
"In 1989, I actually purchased the business from my father," he explained. "And I remember the first thought I had as I signed the bill of sale, was how I could pass this on to my children. That was the very first thought that popped into my head."
Mr. Sterling says two of his three children, aged 13 and 16, are already showing interest in taking over the family business.