Mom and Pop stores: an ongoing tradition
The family-run Mom and Pop store is alive and well. Only now it may be Dad and Daughters, or Mom, Her Nephew, and His Wife.
More than just a proprietorship built by one hardworking person, the family-run shop is one where ''Dad starts building toward the future, bringing in daughters-in-law, wives, and cousins,'' says Don Jonovic.
While Mr. Jonovic, president of the 11-year-old Cleveland-based Center for Family Business, admits that statistics on this phenomenon are ''flaky.'' He thinks roughly 1 million of the privately owned corporations in the United States can be considered family run. The Internal Revenue Service also claims more than 9 million noncorporation proprietorships, of which some untold percentage include more than one family member.
The phenomenon is hard to number, Mr. Jonovic says, because it's largely a ''state of mind.'' Experts see a growing spirit of entrepreneurship in this country, but Mr. Jonovic points out that a small business or a new business is not the same as a family business.
''The average life span of a firm is roughly the working span of its founder in this country--24 to 26 years,'' he says, adding that a family business should stretch beyond this. That they do not succeed their founders is owed largely, he believes, to ''time bombs planted by the owner at the beginning. It becomes his baby, and nobody can tell him what to do, or make him let go.''
He gives an example: ''I met an 85-year-old businessman awhile back who had passed the business along to his son. He told me, 'The kid's coming along fine.' Well, the 'kid' is in his 60s, and (his father) is still there.''
Even those willing to let go may find no takers in the family due to ''poor planning, and no training,'' Mr. Jonovic says. ''Dad comes home every night and complains about his employees, his production costs, his taxes, and then turns to his kid and says, 'Someday, son, all this will be yours.' Well, who wants it?''
The kids, meanwhile, are often wealthier and better educated than their father, ''with all their business-school theories on how to shape the place up'' - knowledge the business founder may see as threatening, useless, or worse, Mr. Jonovic says.
''But these are all people problems--not business problems,'' he points out, and can be worked out through a ''sense of understanding and love.'' Mr. Jonovic sees family love as the essence of this enterprise: ''It's a chance to take something you have created with the people you love and build them a future.''
It is also a chance to ''multiply your earnings by keeping them in the family ,'' he says. ''A successful, growing business is one of the best investments anyone can make--and one of the best legacies anyone can leave.''
The center, which has dealt with roughly 25,000 such businesses in the past decade, suggests three basic steps to keep a family business growing:
First, get some outside advice. ''The firm should be run by Mom, Dad, and Rasputin the Lawyer,'' Mr. Jonovic says.
He explains: ''The kid can't tell the (founder) anything, and Mom can't tell (him) anything. Pretty soon, nobody's telling (him) anything, and that's the beginning of disaster. You need an outsider or a board of outsiders, someone the firm's head will listen to.''
In addition to this impartial judge, family members need training. ''If you want your kids or your daughter-in-law or your nephew to take over, you've got to get them ready,'' Mr. Jonovic says. ''But don't think the kids should all get equal shares in the business. They may not all want it, and it may not be the right business for all of them.'' He advises that the firm's founder look for the one who ''looks interested,'' and give him or her plenty of schooling and on-the-job training.
Finally, he says, ''learn to handle wealth. This is a real problem between the generations--the (father) struggled all his life, and keeps right on struggling long after he really has to. The kids were brought up affluent, and can spend money more freely.''
The center gives such advice through speeches, newsletters, and counseling sessions to its 6,000 members nationwide. Most of their sessions turn up ''problems of continuity,'' Mr. Jonovic says. ''A lot of businesses have trouble moving on to the next generation, which is a real shame. I can't think of anything better you can give to the people you cherish.'