Why Family-Owned Businesses Succeed

Geoff Lewis writes for Small Business Review on the advantages of family owned businesses.  The information is based on a study by Professor Jim Lee of Texas A&M-Corpus Christi.  His findings show that a family-owned business in which the family remains involved in management will outperform a public company with professional management.

Prof. Lee found that :  "Families have a longer time horizon than other investors, because they
are building wealth to pass on to succeeding generations. Family-owned
firms are more stable; they’re less likely to make radical cutbacks in
a recession. They tend to have a high level of trust and
commitment—both to employees and to customers—because how the company
behaves reflects the family’s personal integrity."   

Of course, we knew that all along. 

As the professor points out, Microsoft, Wal Mart, and even Ford Motor Company started out as family companies.  While the study was limited to companies in the S&P 500, Professor Lee is planning a further study on smaller firms, where he expects to see the same results.

Who REALLY Drives the Economy

Here are some interesting facts from the Small Business Administration Office of Advocacy:  (Small business is defined as an independent business having fewer than 500 employees.)

Small firms:

Represent 99.7% of all employer firms.

Pay more than 45% of the total U.S. private payroll.

Create more than 50% of nonfarm private gross domestic product (GDP).

Produce 13 to 14 times more patents per employee than large patenting firms.

Made up 97 percent of all identified exporters and produced 28.6% of the known export value in fiscal year 2004.

So called "small business" is really big business.

More Penny-wise Travel

Here’s part 2 of Forbes.com’s series on budget-wise travel.  This installment focuses on overnight accomodations.  Just like part 1, there is a slide show with 15 tips on curbing lodging expenses. 

Again, there are some good tips that just might save you a few dollars.

Doing What’s Right

Two stories in the news this week bring to mind the difference in how some people live their lives, and the effect ethical behavior can have on a business.  First was the death of Kenneth Lay. The man whose name has become synonymous with unethical practices passed away at a resort in Colorado awaiting sentencing on his conviction for business fraud.  He was scheduled for sentencing in October.

The other story also involves business fraud.  It concerns three employees of the Coca Cola Company who have been charged with fraud after stealing secret documents and a sample of a new beverage from Coke and trying to sell them to Pepsi.

What I hope doesn’t get lost in this story is that the three were caught when they attempted to sell the secrets to Pepsi and the company reported them to the authorities.

I can’t imagine a business that’s much more competitive than the soft drink industry.  Coke and PepsiPepsi_cola_canjpg_3
have been battling it out for the top spot for years.  Any competitive edge is potentially worth
millions of dollars.  But, when they were approached by the three thieves, Pepsi said "No, thank you." 

Pepsi spokesman Dave DeCecco
said,  "Competition
can sometimes be fierce, but also must be fair and legal.  We’re pleased the authorities and the FBI have identified the
people responsible for this."

Enron’s unethical, illegal business practices eventually led to it’s downfall and serious financial
hardship for thousands of stockholders.  As a result, every business is under more scrutiny today than ever before.  But, ethics are something you either have, or you don’t and there will always be people who are tempted by the almighty dollar.  Bravo for PepsiCo management for doing the right thing.

I think I’ll go have a Pepsi.

Penny-wise travel

From Forbes.com comes the first of a four-part series on saving money when you travel.  The article includes a slide show, "Fifteen Ways to Travel on the Cheap."

It’s interesting reading and could save you some serious money.

Say Goodbye to the “Mass Market”

Not a day goes by that I’m not reminded that we live in an amazing age. We have instantaneous access to all the information we can possibly use, right on our desk tops.  Even more amazing, we can get that same information on our pocket computers and even on our cell phones.  24 hour news, sports, and weather are as near as our belt or purse.

Where our grandparents, or even our parents, were amazed to see movies “talk”, or to see 8” black and white moving pictures sent through the air, our kids watch television in the back seat of the car and take it for granted.   We have big screen televisions that fill up an entire wall. 

But, the biggest change in television isn’t the device.  It’s the way we use the medium itself.  In the ‘50s, it was simple.  If it’s Tuesday night, it’s “Uncle Miltie” time.  Later on, most of us had three choices, ABC, CBS, or NBC.  If you lived in a large enough market, there might have been one or two independent stations showing old movies and reruns.

Then came cable.  First, cable was a means for people living outside of major markets to get a clear picture.  Then, slowly, other channels were added and cable began to appear in the big cities.  CNN came along and meant that we didn’t have to wait until 6:00 p.m. to see the news.  We could actually watch breaking events as they happened.

When clouds appeared on the horizon, we could tune to The Weather Channel to find out what was happening.  “Local on the 8’s”  meant we could actually scan the local radar every ten minutes.

Fast forward to 2006.  The big three networks are scrambling.  Advertising revenues are down.  We have hundreds of choices on cable and satellite.  Not going to be home on Thursday evening?  TIVO “CSI” and watch it at your leisure with the added advantage of being able to fast forward through the commercials.  Or, download it to your i-Pod and watch it while you walk the dog.   Broadcast TV’s historical business model is toast.

Worse than cable, at least as far as the networks are concerned, is the Internet.  Now, we don’t even have to wait ten minutes for our local weather.  Just pull up the latest doplar radar images from http://www.noaa.gov.  Want news?  Your computer doesn’t just deliver the news, it can filter it.  You can tell it in advance what you’re interested in and just those headlines will be delivered right to your screen.

You control the direction and the speed of the “information superhighway.”  Broadcasting is out.  Narrowcasting is in.  The days of some network executive sitting on the top floor of a skyscraper in New York deciding what information and entertainment you’re going to get, and when you’re going to get it are over.  As media consumers, we decide.

So, what’s all this have to do with our business?  Simple.  Our customers have choices.  When there was one major TV network, the choices of where to shop and what to shop for were much more limited too.  Fewer stores carried fewer brands.  The price of an item was pretty much a local affair.  If only one store in town carried a particular brand, that store set the price.

Today, if I can choose what information and entertainment I want delivered into my home, and I can choose when I want to receive it, why would I settle for anything less in other areas of my life?  If I need a new lawn mower, I want choices; lots of choices.  I want it to do certain things, things that I choose, not things that someone else chooses for me. 

I also want a certain level of service.  Maybe I can change a spark plug once in a while.  Maybe I can’t.  But, I want to decide.  Don’t tell me that service that I don’t want or need is “included” in the price when I know darned good and well that I’m paying for it. 

There will always be a percentage of the population that only wants the lowest price.  So, there will always be mass merchants.  But, for the more discriminating person, mass merchants are no more valuable than mass communication.  The TIVO customer, the customer who gets his news from Yahoo, and not from NBC or the New York Times, wants to decide for himself.  He’s already done his homework on the net and knows what a 20” self-propelled lawn mower with electric start and oversized wheels should cost.  He knows what he wants and he knows what he wants to pay for it.  He also knows the services he wants bundled with it and how much those services should add to his cost. 

If you have what he wants, at the price he wants to pay, you have a chance at his business.  If you don’t, you don’t.  It’s as simple as that.

This guy is in love with information.  If you can tell him something he doesn’t know, and if he doesn’t smell a sales pitch, you’ll be his new best friend.  Show him how to take better care of his lawn, or how to make his mower last longer, and he’ll tell his current friends about his new friend.  How important is that?  Remember, this guy doesn’t watch commercials.  Neither do his friends.  Word-of-mouth may be the only way to get your message to them.

Get his permission to put him on your email newsletter mailing list, and you’ll have an excellent chance of selling him an edger, and a trimmer, and a snowblower, as long as your newsletter contains information that he considers valuable.  Again, if he values your newsletter, he’ll make sure his friends get on your mailing list too.  You become a valuable source of information.  That’s really narrowcasting.  And you control the content.

For years we’ve all heard that the independent business is in trouble.  The big box stores are going to get it all.  Nonsense!  The so-called “mass market” isn’t nearly as “mass” as some would have us believe.  Buyers have experienced the freedom to choose their information and entertainment, they want that same freedom in other areas too.  One size fits all doesn’t anymore.   It’s up to us to give them the choices that they demand.

Here’s a question for you.  What are you doing to give your customer the same kind of choices that she gets in her information and entertainment?  How are you catering to the new, non-mass market?

Eleven Score and Ten

Americanflagcircle200
July 4, 1776.  230 years ago.  The Declaration of Independence.  The birth of a nation and a way of life.  We celebrate the birth of the greatest nation in the world with barbecues and pool parties, ball games and picnics, and fireworks.  Lots of fireworks.

On November 19, 1863, a new cemetery was dedicated on the site of a Civil War battlefield.  The program included "Remarks, by the President of the United States."  Ten sentences.  272 words.  In under three minutes, Abraham Lincoln gave what most people would say is the greatest speech in the history of the United States, before or since.  In case you haven’t read it recently, here’s what he said:

Four score and seven years ago, our fathers brought forth on
this continent a new nation, conceived in Liberty, and dedicated to the
proposition that all men are created equal.

Now we are engaged in a great civil war, testing whether that
nation, or any nation, so conceived and so dedicated, can long endure.
We are met on a great battle-field of that war. We have come to
dedicate a portion of that field, as a final resting place for those
who here gave their lives that that nation might live. It is altogether
fitting and proper that we should do this.
But, in a larger sense, we can not dedicate—we can not
consecrate—we can not hallow—this ground. The brave men, living and
dead, who struggled here, have consecrated it, far above our poor power
to add or detract. The world will little note, nor long remember what
we say here, but it can never forget what they did here. It is for us
the living, rather, to be dedicated here to the unfinished work which
they who fought here have thus far so nobly advanced. It is rather for
us to be here dedicated to the great task remaining before us — that
from these honored dead we take increased devotion to that cause for
which they gave the last full measure of devotion — that we here highly
resolve that these dead shall not have died in vain — that this nation,
under God, shall have a new birth of freedom — and that government of
the people, by the people, for the people, shall not perish from the
earth.

Have a Happy Independence Day.

Business Goes Where Business is Invited

Susan Miller of the Columbus (Georgia) Ledger-Enquirer writes on invitational marketing,

"promotional strategies that that invite customers to the place of business for some type of event or giveaway, for which nothing is explicitly expected in return.  Some examples include invitations to a seasonal merchandise of new product preview, holding a Customer Appreciation Day or a Holiday Open House, or inviting people to stop by for a free gift."

She makes some very good points.  Once someone has been to your store, they’re much more likely to return.  A connection is established that will be remembered later on.  In The Seven Habits of Highly Effective People, Steven Covey calls it making a deposit in their emotional bank account. 

But, invitation marketing can backfire if the event or giveaway isn’t handled in the right way.  For example, as Miller points out, if you offer something free "with no purchase required", you must treat the visitor like your best customer, even if they don’t buy anything.  The worst thing you can do is to spend your money and end up with a potential customer who thinks less of your business than she did before.

Think of invitation marketing as an investment in the future. 

For many of you, classes and demos are a way of life.  Chances are you’re already using this type of marketing.  For others, it may take a bit more imagination.  The key is that people love "free stuff", whether it’s a promotional item with your name on it, or information on the latest and best products.
Of course, the most effective way to do this is to invite your existing customers back.  Do a targeted mailing to people on your mailing list, preferably something hand-written, inviting them in for something that’s not available to the general public.  Allow them to bring a friend.  Even if you don’t sell a single item during the event, the future business should more than cover your expenses and turn a nice profit.