My life has revolved around a family business. It’s been a labor of love.
Over the last 45 years, I have experienced everything and anything that can be imagined, both in business and with family. My family business journey at Paraco Gas has undoubtedly given me strong beliefs.
I have had business dealings with employees from public companies to businesses with all types of corporate structures. As a result, I genuinely believe that the family business model is the most compelling business structure and most rewarding environment for employees to work in.
There are over 5.5 million family businesses in the United States. Family business owners employ 98 million people and account for 67% of our gross national product.
All family businesses, no different from public companies, come in all shapes and sizes—each with different business models, cultures, and operating strategies. Over the years, I have met thousands of family business owners.
What distinguishes the family business model is its entrepreneurial nature and intense focus on the customers, employees, and communities they serve. The only question is how does a family business effectively tell its story and create the right culture and strategy that enables them to compete with even Fortune 500 companies for management talent?
When dad started his business from a garage in Mt. Vernon, New York, his employees consisted of my mom and one other employee. This is typical of how millions of family businesses got started.
Over the next ten years, as our company grew, Pat relied on his four sons to help manage the family business. There came a time for him to name me as the CEO and transition Paraco to a second generation.
The company was now twenty years old and growing. I was determined to bring professional management into our business. Even though I just completed my MBA in Finance at Iona College, I recognized the need to hire our first CFO.
Our company desperately needed to improve its accounting and management systems. It was also imperative to strengthen our capital access as we required commercial banks to support our anticipated growth.
My business objective was to hire a candidate who could bring new processes and ideas into our business. Likely someone who had more prominent, maybe even public company experience. Equally important, a person who could work in our family environment.
The first challenge was to provide an adequate compensation package. Since we could not offer stock or stock options in our company, we had to think out of the box.
We learned about phantom stock plans. They are long-term compensation plans, typically three to five years. It allows the employee to share in the equity growth of the company.
Over the last 25 years, we have successfully used this concept. We attracted and retained operational sales and administrative management talent that became essential for our success and growth.
Once family business owners can compete for management talent regarding compensation, the rest is easy. Family businesses have so much more to offer professional managers. Employees at all levels want to be in a company that cares about them, their customers, and the communities in which the employees live. These values are ingrained in every successful business I know.
In addition, highly driven managers want to make a difference within the company they work for. They want to drive strategy and the vision of the company.
The career experience in a family business for professional managers is unparalleled. Unlike large public companies, where the tendency is to pigeonhole the employee in a specific job, family businesses tend to have more hybrid structures where employees wear multiple hats and experience more aspects of the company.
Most importantly, at Paraco Gas, employees are viewed as part of the family, as with all successful family businesses. Family business owners work on discovering the talent and passion of their employees, searching to give them the career opportunities that support their own families and brings them a feeling of deep satisfaction in their job.
I love family businesses. To family business owners, my message is: bring professional management into your organization to make you a more profitable organization.
My message to talented managers who never experienced family business is to consider joining a family business that fits your values. The rewards are beyond compensation alone.