It might bring the company more -- more sales, more customers, maybe even more profits -- but it hardly sets the stage for continuous growth. Usually, the most noticeable effect of all that hard work is that the leader of the family business becomes tired and frustrated, and begins to feel trapped in a company that won't grow. This frustration is often passed on, leaving the next generation feeling stymied without knowing why.
Growth, then, requires a vision that's larger than any one person and an investment in business practices that can carry the vision forward. This is where entrepreneurs can adopt some of the methods big companies use. No matter how small your company is right now, it's time to start thinking -- and acting -- big.
Fran McGowen, founder and president of CarSense in Philadelphia, had a vision that took him beyond what his family business had been doing, successfully, for years. Fran saw the family car dealership as a mature but declining cash cow. He knew he had to use the business to fund a new stage of growth, something few family business owners realize.
McGowen envisioned a new dealership with a commitment to people and growth rather than one that sold a particular brand of car to increase its short-term profit. He would sell high-quality, reconditioned cars at fair, no-haggle prices. Cars would come with six-month, full-refund warranties and a five-day, no-questions-asked return policy. Salespeople would receive salaries and bonuses on volume, not just commissions.
McGowen used profits from the family dealership to launch CarSense. He eventually sold the family business and invested nearly $3 million in CarSense.
McGowen hired only people who were excited about his vision, including a handful of the 50 employees who had worked for his family. He created a profit-sharing plan for workers, so they could share in both the goals and the results of his vision.
From Day One, McGowen embraced big-company management practices. He instituted a formal planning and budgeting process that included managers and employees. He put together an advisory board and held periodic management retreats. Each month managers who had been on retreats held training sessions for other employees, sharing what they had learned. And McGowen outsourced most of marketing, finance, and training, which he otherwise couldn't afford. Those operations are crucial to growth, but most small companies forgo them because they can't do them themselves.
The result: In five years, CarSense has grown to 110 employees and $70 million in revenues, and is planning its third location. By acting as if CarSense were a large, growing company, McGowen is turning it into one. Timothy G. Habbershon is director of the Institute for Family Enterprising at the Arthur M. Blank Center for Entrepreneurship, Babson College.