The future of Black-owned family businesses.
WHEN ROBBIN GORDON DECIDED TO START A MEETING PLANNING business six years ago in Rocky Hill, Conn., her husband, Lenworth, couldn't have been more supportive. He played "Mr. Mom" while continuing to hold down his job as a computer systems specialist at Aetna Life Insurance. Later, he gave up his "dream job" to work for his wife after she relocated the company, Conference Management Associates Inc., to Atlanta in search of more business.
"Robbin said she needed my support in the business now more than ever," explains Lenworth, who signed on as CMA's vice president and operations manager last June. "That's when I decided to get fully involved in the company."
In more ways than one, CMA is not your father's family business, nor are thousands of other companies. No longer are family businesses structured exclusively along lines of patriarchy, led by the family's oldest male and with names ending with the obligatory & Son."
No longer are women's roles in these businesses limited to maintaining the home front, or at most, behind-the-scenes support in accounting or administration. The traditional family business hierarchy--older sibling ahead of younger, sons ahead of daughters, relatives by blood ahead of relatives by marriage--no longer necessarily applies. And what's more, family business experts say that this is not only good for family business, but in many cases, it s critical to their ability to compete in a rapidly changing economy. Says family business expert james I. Herbert, "The bottom line is that we've got to start thinking about things in a different way."
Adopting new ways of thinking may be particularly critical to the future of black-owned family businesses--those concerns owned and managed by people related by blood and/or marriage. And we're not just talking about mom-and-pop neighborhood enterprises. Many of the nation's largest companies have significant family participation in their ownership and management. In fact, nearly half of the companies on the BE INDUSTRIAL/SERVICE 100 list, including TLC Beatrice International Holdings in New York, Johnson Publishing Co. in Chicago, H.J. Russell Construction in Atlanta and The Bartech Group in Detroit (not to mention Earl G. Graves Ltd., publisher of BE), are family-owned and managed. It is not an exaggeration to say that the future of black business depends largely on the degree to which black families are willing and able to run companies for growth and profit.
Leaving a legacy for future generations is a key motivation for pursuing entrepreneurship, particularly for African Americans. But achieving that legacy isn't easy. Only one in three family firms survives two generations; only one in six survives three generations. "The challenge is not starting a family business, but being able to pass it on from generation to generation," says John Sibley Butler, professor of management and chairman of sociology at the University of Texas at Austin.
The good news is that entrepreneurs like the Gordons have a good shot at beating the odds. Why? Because they have the qualities experts say will characterize the successful family firms of the 2 1 st century: a commitment to entrepreneurship; valuable experience in corporate America; and a willingness to bend--and break, if necessary--the traditional rules of family business management. Indeed, to keep pace with increasing global competition, family-owned businesses must be flexible and innovative in their approach to solving problems.
Herbert, the director of the Urban Enterprise Initiative of the Family Enterprise Center at Kennesaw State College in Marietta, Ga., joins other experts in advocating a particular approach to family business. It is based on an entrepreneurial spirit, which is deeply rooted in the African American community. "Prior to World War II, there was an abundance of self-employment options in our community," says James H. Todd II, president and CEO of Educational Resource Development Group, an Oakland-based family business consulting firm. "But then we started looking for the safe paychecks, and the spirit of entrepreneurship went out of the community in the form of employment in big businesses. Now we're looking back and realizing that was a mistake."
But just as a generation of African Americans was steered away from family businesses toward new opportunities in corporate America, a new generation is being steered back, in large part, because of changes in the economy. "Because the competitive environment is so intense, to stay in business, parents are looking for their adult children to come into the family business and bring their corporate expertise with them," says family business consultant Leslie J. Epps, president of L.J. Epps & Associates in Columbus, Ohio. "At the same time, children are finding that job security no longer exists, and that they're more likely to achieve their potential in the family business than in corporate America."
When Robbin Gordon, then a meeting planner for John Hancock Financial Services Division, decided to launch CMA, the family relied on her husband Lenworth's income, benefits and flexible work schedule in order to provide and care for their two young children, Alana, 5, and Lenworth Jr., 4. Her husband also helped out with the business whenever his wife needed him.
His support did not waver when Robbin set her sights on landing a major contract with the U.S. Centers for Disease Control and Prevention (CDC) in Atlanta, nor when she decided that the family should relocate there. Robbin commuted between Atlanta and Connecticut for two years in order to service both new and existing clients.
Lenworth accepted a severance package from Aetna, which was downsizing its workforce, and made plans to return to school after the relocation to Atlanta last May. But when there was an unexpected delay in signing the CDC contract, Lenworth signed on as CMA's vice president and operations manager.
Together, the Gordons ironed out the kinks of the CDC deal, securing a five-year, $3 million contract to provide conference planning and support services to CDC's Public Health Practice Program Office. "I felt as if the weight of the world had been lifted off my shoulders," Robbin recalls. "Now our major challenge is to make sure we remain viable."
Through strategic planning and open communication, families must develop a clear vision for their business that includes everyone who works for or is affected by the firm, according to Epps. The Gordons knew themselves and each other well enough to know that Robbin was the entrepreneur, not Lenworth. So they rejected the traditional model that favors men taking the leadership role and organized the family to support Robbin's initiative. Through their work for major corporations, both Robbin and Lenworth had already learned many of the business skills needed to run their company. But all of the resources essential to running a business--including market expertise, capital, and access to markets and technologies--won't always be available within the family. In order to thrive, experts say that family business owners must be willing to look beyond family ties for necessary resources.
For example, depending on their goals, family firms may be best served by hiring a nonfamily member to run the business. If that's not feasible, family businesses should set up a board of advisors qualified not by family connections but by expertise in the areas the company needs in order to be well-managed. Likewise, the family may be the first place to look when the business needs capital, but if enough resources aren't available within the family, entrepreneurs must be willing to consider other sources.
"As new markets open up in Africa, African Americans should be first in line to take advantage of those opportunities, but they won't be able to without capital, " says Herbert. "Many closely held family businesses certainly will be able to participate in the global marketplace, but to be competitive, some of our family businesses will have to seriously consider going public."
Family firms that want to tap into new markets and technologies should consider forming strategic alliances with companies that have the resources they lack. That's the approach Charlesh. James Ill took three years ago when he wanted to expand his company's operations and market reach. James is the fourth-generation CEO of C.H. James & Co., a 112-year-old wholesale food distributor based in Charleston, W.Va. In 1992, james acquired a controlling interest in North American Produce, a Los Angeles processor of sandwich lettuce, sliced onions and salad mix for McDonald's restaurants.
"This is the era of strategic partnering," says james, whose $19.2 million business is No. 90 on the BE INDUSTRIAL/SERVICE 100 list. "Family businesses that want to grow and develop can't rule out partnering with other companies, even majority-owned companies, if those partnerships will allow them to move their businesses to the next level."
Moving his company to the next level is an important consideration for james, who has three sons, C.H. James IV, 9, Nelson, 7, and William, 2. When the time is right, he plans to introduce them to the business. For now, he's concentrating on putting in place the estate management tools, including a pension program, retirement plan and insurance policies, which will ensure he can pass the business on to his sons in good financial shape.
While CMA is more than a century younger than C.H. James & Co., the Gordons are also thinking about their children's future. As much as anything, they want to instill in them the idea that entrepreneurship is a natural, even preferable, career option. While their children are still too young to understand very much about what their parents do, they do understand that when mommy and daddy go to work, mommy and daddy are in charge. "When they come to work with us they see that we have the keys and they know that this is our office we're opening up," says Robbin. "They see us making the decisions and coming and going as we please. All that is planted in their little psyches.
"We pray we will have a family business legacy to leave our children," Robbin says. "We feel it's our responsibility to give them that option."
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|Title Annotation:||Black Enterprise 25th Anniversary: Saluting the Past, Shaping the Future|
|Author:||Harris, Adienne S.|
|Date:||Aug 1, 1995|
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