#b#Len Green#/b# understands how family businesses run because he’s been working in them since he got out of the Air Force. Though he is today a successful businessman — he owns the Green Group in Woodbridge, which consists of 14 companies — he didn’t start out that way.
As a young man, Green flunked his way out of three colleges before his father, an accountant, straightened him out. Green then joined the Air Force and cashed in on the G.I. Bill, getting his bachelor’s in accounting from Rutgers. He immediately joined his father’s firm.
Green left his father’s employ for Deloitte and Touche before coming back to take over when his father retired, then branched into investing and managing companies, starting the Green Group, a business advisory firm, several years ago. He earned his MBA at Harvard, where he says “I found out what I was doing wrong.” He also has a master’s in taxation from NYU.
Green has taught entrepreneurship and family business at Babson College in Massachusetts and is a frequent guest and subject in national magazines and on television. He is present “Ten Great Ideas to Make You and Your Family More Successful in This Challenging Economy” this Wednesday, June 23, at the Technology Center of New Jersey in North Brunswick.
The presentation is an extension of the Rothman Institute for Entrepreneurial Studies’ family business program at Fairleigh Dickinson University, where Green teaches.
Carrying on the family tradition, Green has employed all three of his sons and his daughter. None still work for him, but all, he says, learned a lot about starting and running businesses — the Green Group’s main modus operandi — by working for him.
#b#Recession, you say#/b#? Family businesses have certain problems that non-family businesses do not. But one of the distinct advantages of family-operated businesses, says Green, is that they weather recessions better.
While non-family companies combat tough times with cuts and wage freezes, families tend to look out for each other.
As a result, Green says, family members keep higher morale and work harder on the business itself. Family businesses also tend to have lower overhead and a personal-touch nature that keeps them connected to their customers.
“Family businesses know how to be lean and mean,” he says. “If you ask me, the government stimulus money should go to small, family businesses, not the big businesses.”
#b#Let go, dad#/b#. While Green advocates for family businesses, he is aware of the problems inherent to them. Relatives are often dicey to work for, particularly when the father started the company and wants to pass it on to his kids.
Problem No. 1 is that many kids do not like their parents’ businesses. They see the hard work, the long hours, and, often, uninteresting subject matter,
Green says. They don’t want to take over and they often get tired of working for the old man, who will, whether he means to or not, treat the kids differently from other employees.
Problem No. 2 is that dad, after building the business, the client list, the relationships, and the company name, usually grows to see the business as another child. Patriarchs often do not want to let go and, by hanging on too long, often make the kids feel as if it isn’t worth it to stay around.
Problem No. 3 is that the kids do not look at the business and the customers the same way. While the founder is more likely to accept late payments from longtime customers, let a few things slide, maybe comp a bill even though the customer has eaten 90 percent of her lunch before complaining about it, the children, says Green, tend to be more hard-ass. They don’t believe in undercharging anyone and will not cut anyone a break. Whereas dad knew that a few rules bent usually means return business, the kids often believe dad was making big mistakes, Green says.
“The motivations are different for different generations,” he says. “In fact, we did a survey of 365 [family-owned] companies and found that only a third can pass on to the second generation.” Far fewer still, he says, pass onto a third. “The first generation usually thinks more long-term,” he says. “The second, very short-term.”
#b#Counterintuitive thoughts#/b#. Kids who attend business school often believe they know better how to run a business their parents have run successfully for several years. And the kids often do not see their parents as successful, given the money they bring in versus the time they spend at work.
But, Green says, dad knows a lot after 20 years. Kids just don’t like to admit it. Green’s advice: before you join your father’s company, go out and work for someone else. You will learn what it’s like to run a business and get to work before you stride into dad’s firm with that unwavering sense of entitlement.
Green also advises entrepreneurs, family-centered or not, to forgo the business plan. The staple of many entrepreneurship gurus, the business plan is the roadmap you draft to get you from idea to retirement. Most advisors will tell you to write one — and, indeed, most sources of financing will ask to see one before they will fork over a loan.
But Green doesn’t like them, particularly when times get tough. “I’m involved in 14 businesses,” he says. “None of them have a business plan.”
Green does not advocate blindly running out and diving in. Entrepreneurs need to know what they want to do and have a direction, he says, but trying to adhere to a strict business plan, particularly when the economy comes in to drag your profits into a dark alley, will only lead to rigidity.
“It’s not about business plans,” Green says. “Business is about getting the right group of people together.” Like a family.