In 2009, when Larry Zinn took over as sales manager for the Infiniti dealership that his father owned, he had a great idea: retrain the sales staff in a team approach and offer customers complimentary add-on services for the first year.
Some salesmen who were used to selling the same way for decades up and quit. But that didn’t deter Larry from insisting a new sales culture and value proposition for new car buyers was necessary. “I was persistent with everything I’ve believed we needed to do going forward. People were going to embrace change or move on,” says Larry, 28.
The resistance quieted, however, after Larry recruited young salespeople and had them trained in the new advantage program. The new approach helped push sales volume up 72 percent. "We had a lot of success with it,” he says.
Larry Zinn’s experience is not unusual for family-owned businesses that survive into a third generation and employ new tactics to keep from becoming obsolete.
Nationally, family-run businesses account for nearly 35 percent of the largest companies including Ford, Koch Industries, Hilton, Wal-Mart, Loews and Ikea. In South Florida, family-run businesses are particularly prevalent and account for a majority of the largest Hispanic companies, including Goya, Bacardi, El Dorado and Sedano’s Supermarkets.
But while more than 30 percent of all U.S. family-owned businesses survive into the second generation, only about 12 percent are passed onto the third generation, according to Family Firm Institute, a Boston-based association for family enterprise professionals. Those that do survive have a few intriguing commonalities: an ability to stay relevant, think bigger and take a long term view.
“They try to figure out where they want to be in 10 years and take steps to make that target,” says Wayne Rivers, president of The Family Business Institute in Raleigh, N.C.
Most third-generation family businesses, particularly those in South Florida, were started by a scrappy entrepreneur who saw business ownership as a way to provide for the family. Those businesses include grocery chains such as Sedano’s, restaurant operators such as Las Vegas Cuban Cuisine and airport concessionaires such as NewsLink.
Typically, in those businesses, the founder brought his kids with him to work, put them in the kitchen, the stock room, the sales floor, and taught them on-the-spot business lessons. Those kids eventually came to work full time and helped the company evolve beyond a seat-of-the-pants start-up into a more sophisticated business with processes and systems.
Now comes the third generation, who are more likely to have received formal business education before they return to the company. Often, they are able to leverage that training and move the company forward dramatically. But the succession also comes with challenges. They must keep the respect of longtime employees and show the same dogged commitment to seeing their company succeed, even after having already grown up enjoying the fruits of its success.
In successful third-generation businesses, the senior generation often stays on to ensure that commitment, adopting a role as mentor or advisor while creating an environment where younger family members can take on real responsibility, says Rivers, who consults for family businesses. “They get out of the way, let the next generation make their own mistakes, and gracefully exit when it’s appropriate.”