- The Washington Times - Saturday, June 21, 2003

Gwen Loftin’s family has been selling hardware in downtown Washington for five generations. That’s more than 100 years of stocking nails and glue, hinges and tools, keys and paint at W.J. Candey Hardware. Mrs. Loftin’s store on 18th Street NW is the kind of place where you can find a box fan in the dead of winter or an obscure appliance part that might be hidden away behind merchandise stacked to the ceiling.

It also is where you can find Mrs. Loftin, 69, and her son-in-law, Eric Mattsson, the store’s general manager, discussing small details, such as a customer’s order, or the big picture, such as how the store can evolve to stay in business another 100 years.

W.J. Candey Hardware is the quintessential family business. In this era of corporate mergers and national chain stores, Mrs. Loftin takes pride in the store and her relationship with her two grown daughters and Mr. Mattsson, all of whom have a hand in the store’s operation.

“We’re family, so no matter what it is, you stick with it,” says Mrs. Loftin, who unexpectedly took over the store in 1978, when her husband, E.L., died suddenly at age 43. “When it isn’t family and you don’t care, you can go and do something else. We’re certainly not having the best year, between September 11 and the war and the big box stores, but people always need hardware. I feel bad for the other family businesses downtown that have closed.”

The term “family business” covers a lot of territory, says Ira Bryck, director of the Family Business Center at the University of Massachusetts. Mr. Bryck’s center is one of about 100 university-based groups that serve as resources for family-owned businesses.

A vast majority of companies in the United States are family-owned businesses, he says. That includes everything from such behemoths as Wal-Mart to such shops as Mrs. Loftin’s.

In most of those companies, time has to be spent negotiating business decisions while dealing with typical family dynamics.

“Ninety percent of businesses are family-owned,” says Mr. Bryck, who spent 17 years running his family’s children’s clothing store on Long Island, “but a whole lot of those businesses don’t function well because owners and managers are still victims of sibling rivalries and that type of thing. I say, ‘Treat your business like a business and your family like a family.’”

That means having regular meetings to discuss the company’s goals, who is in charge and how those in charge are going to be accountable, he says.

“Not every company is going to save the world,” Mr. Bryck says. “You need to be realistic. You need a shared vision, and you need to be open to a diversity of opinions. That doesn’t mean you have to do it just like dad did or get out.”

While the overall economy has been stumbling, the outlook looks good for larger family-owned businesses. The Raymond Family Business Institute, a nonprofit family-business consulting group, and MassMutual Financial Group, a financial services organization, recently surveyed 1,000 family-owned businesses spread across the manufacturing, wholesaling, construction and retail industries. The nationwide survey found that mean revenues from those companies have grown to $36.5 million — up more than 50 percent since 1997.

More than half of the respondents said they planned to increase staff over the next year, and nine out of 10 respondents said they believed the same family would control the company in five years. A quarter of those businesses said they carry no debt, and more than a third said they expect that the next chief executive may be a woman.

On the downside, 73 percent of the businesses said they had no formal, written strategic plan. Nineteen percent said they had not completed estate planning, a situation that could mean disaster upon the death of the senior owner.

“I constantly harp on family companies professionalizing,” says James Lea, a professor of family medicine at the University of North Carolina at Chapel Hill. Though he doesn’t own a business, writing and speaking about family business issues is his specialty. “There need to be written policies and procedures on everything from everyday perks to who gets hired. Doing that would save so much grief.”

Making the transition

Cindy Bertaut made sure everything was legal and formal when she bought her father’s business, Glogau Photography Studio, in 1994. She wanted both the business, located in Bethesda, and the relationship with her father, Earl Goldstein, to thrive.

“I knew of some family businesses that just dissolved because of relationship issues,” says Ms. Bertaut, 43. “We had separate lawyers, and we drew up detailed contracts that covered everything from how payments would be made to professional responsibilities to the specifics of the lease.”

Still, much that goes on at the photo studio is a result of the good relationship between Mr. Goldstein and his only child and not the work of contract specifics. Mr. Goldstein, 75 and mostly retired, still pitches in by covering the occasional wedding assignment. He returned to work full time for several months in 1995 so Ms. Bertaut could take a proper maternity leave.

When she was growing up, Ms. Bertaut didn’t necessarily plan on being a photographer or taking over the studio. She studied science in college, then worked for the Smithsonian Institution for several years. After her job was eliminated, she tried the family business. Ms. Bertaut learned the art of photography — as well as the business side of the studio — from her father.

“After I worked here full time for a couple years, I caught the bug,” she says. “I apprenticed with Dad. It was five years before I even took a picture. When I came to work, some people thought I was going to get all these perks, but I was an hourly employee, learning the business from the ground up.”

The transition from Mr. Goldstein’s being in charge to having Ms. Bertaut run the studio was not completely seamless. Soon after Ms. Bertaut took over, she let two longtime employees go.

“People said, ‘I can’t believe Cindy did that,’” Ms. Bertaut says, “but I was good at explaining why. You have to keep your emotions out of things. That can be hard.”

It also was a transition for Mr. Goldstein to go from being his own boss to being his daughter’s part-time employee.

“I think it can be a tough thing when someone takes over for a parent,” Mr. Goldstein says, “but I am so fortunate to have my daughter in the business.”

‘We’re really close’

When your co-workers are your siblings, it helps to like each other a lot.

That’s the advice of David Loeb, who runs Loeb’s New York Deli in Northwest Washington with his sister, Marlene, and his brother, Steven. Mr. Loeb’s parents, Walter and Sigrid, opened the restaurant near McPherson Square in 1959. The parents recently retired, leaving Loeb’s in the hands of their offspring, who have been working in the business more than a decade.

“To run a family business, you have to be able to do a little of everything,” says Mr. Loeb, 38. “You have to be able to work with your siblings. You have to have good communication skills. You have to be able to deal with the public. My siblings and I get along fine. We’re really close. We each have different roles here, so we can work together.”

It is not written in stone, but the division of labor goes something like this: Steven, 28, does a lot of the cooking. David takes care of the purchasing and bookkeeping. Marlene, 36, is in charge of the catering operation. She also is the de facto boss by virtue of being involved in the business the longest.

“She leads us because she has a lot of experience,” David Loeb says, “but we discuss everything. Sure, there is conflict, but that is normal in a family business. You can’t take anything personally. At the end of the day, it is all forgotten.”

In fact, if something needs to be discussed before Loeb’s, which is open only on weekdays, closes for the weekend, David and Marlene would rather talk about it over dinner Friday than think about it all weekend.

“Since we all work together during the week, we do not hang out together on weekends,” David Loeb says. “Everyone has their own life. In a family business, you can’t just put everything down on Friday afternoon, so we will talk about it on Friday night. We do not want to take business into the weekend.”

Mr. Loeb says he is in the restaurant business for the long haul but he never was pressured to join it. He spent a few years working to turn his passion for sports into a career when he graduated with a bachelor of arts degree in communications from the University of Maryland in the 1980s.

“Marlene was more interested in the business when she was younger,” he says. “I knew it would always be there, but I wasn’t sure I wanted to be involved in it. I was never forced into the business — none of us were. In 1989, we thought it would be a good idea for me to try the business.”

Like Ms. Bertaut at the photo studio, Mr. Loeb had to learn the restaurant business from the bottom up. That meant everything from slicing corned beef to running the cash register.

Family-run restaurants also have been affected by national chains. Diners have a plethora of choices when they head out of the office for a sandwich or coffee. Even though Loeb’s has been in business 44 years, staying in business relies on a number of things, Mr. Loeb says.

“We believe you can beat the competition by working hard, closely managing the store, coming up with new ideas and providing friendly service and a quality product,” he says. “Some popular restaurants are run by a corporation. When you have a family restaurant, it is more of an emotional investment.”

MORE INFO:

BOOKS —

• “GENERATION TO GENERATION: LIFE CYCLES OF THE FAMILY BUSINESS,” EDITED BY KELIN E. GERSICK, HARVARD BUSINESS SCHOOL, 1997. THIS BOOK EXPLAINS THE DIFFERENT PHASES A FAMILY BUSINESS WILL ENDURE AND HOW FAMILY MEMBERS AND EMPLOYEES CAN GET THROUGH THEM.

• “KEEP THE FAMILY BAGGAGE OUT OF THE FAMILY BUSINESS: AVOIDING THE SEVEN DEADLY SINS THAT DESTROY FAMILY BUSINESS,” BY QUENTIN FLEMING, SIMON & SCHUSTER, 2000. THIS BOOK HAS ADVICE ON SEPARATING BUSINESS CONFLICT FROM PERSONAL CONFLICT.

ASSOCIATION —

• ASSOCIATION TO ADVANCE COLLEGIATE SCHOOLS OF BUSINESS, 600 EMERSON ROAD, SUITE 300, ST. LOUIS, MO 63141. PHONE: 314/872-8481. WEB SITE: WWW.AACSB.EDU. THIS ORGANIZATION IS AN UMBRELLA GROUP FOR THE 100 FAMILY BUSINESS CENTERS THAT OPERATE AT VARIOUS UNIVERSITIES. FAMILY BUSINESSES CAN CONTACT A NEARBY CENTER FOR HELP WITH LEGAL ISSUES, MEDIATION, ORGANIZATIONAL ADVICE, AND NETWORKING AND MARKETING OPPORTUNITIES.

ONLINE —

• THE WEB SITE OF FAMILY BUSINESS MAGAZINE (WWW.FAMILYBUSINESSMAGAZINE.COM) HAS INFORMATION AND PRACTICAL ADVICE FOR OWNERS OF BIG AND SMALL FAMILY BUSINESSES.

• THE WEB SITE OF THE FAMILY BUSINESS CENTER AT THE UNIVERSITY OF MASSACHUSETTS (WWW.UMASS.EDU/FAMBIZ) HAS DOZENS OF ARTICLES ON FAMILY BUSINESS TOPICS AS WELL AS ADVICE ON HOW TO DEAL WITH THE DYNAMICS OF A FAMILY BUSINESS.

• ARTICLES BY FAMILY BUSINESS EXPERT JAMES LEA CAN BE FOUND ON THE WEB SITE FOR AMERICAN BUSINESS JOURNALS, WHICH PUBLISHES BUSINESS JOURNALS IN MANY CITIES. THE ADDRESS IS: WWW.BIZJOURNALS.COM/EXTRAEDGE/CONSULTANTS/FAMILY_BUSINESS.

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