Join the club
The company slogan is “Boring Means Business.” But it took A. Dean Boring 26 years before he began to feel that the business his grandfather founded in 1924 was, well, boring. Dean joined the office supply and equipment company straight out of high school in 1968. His father was an outside salesman who spent much of his time away from the Lakeland, Fla., home office but still tried to do everything himself. Dean was more of an administrator who ran the business with his hands in everything. In 1979 he bought out his dad and has since overseen a 600% spurt in annual sales, to $7 million. Now the question became: What next?
“The business had been successful, but not as successful as it could have been,” says Dean, 52. “I wasn’t taking advantage of the opportunities there. Maybe I sort of hit a wall.”
Joining the Copier Dealers Association, which exposed him to other owners in his industry and new ideas, pried Dean Boring out of his rut. “When I realized how much I didn’t know, I became motivated again,” he says. “I found out I was an unconscious incompetent—not overall, but in certain management concepts.” After attending association meetings, listening to speakers and hobnobbing with colleagues, Dean graduated to what he calls a “conscious incompetent—I became aware there were things I needed to research and learn, and principles I needed to adopt.”
Dean subsequently put himself and his top team through some management training, then focused on hiring the right people, managing them properly and motivating them to excel with team concepts. “I had to find out how to empower other people and let them contribute as much as possible, based on their attitudes, skills and knowledge,” he says.
To maintain his momentum, early this year Dean joined a second organization, The Executive Committee (TEC) (see “Sizing Up the CEO Support Groups,” FB, Autumn 1996). As Dean describes it, “TEC emphasizes accountability. You have a chairman—a retired executive who was very successful—who meets with you once a month individually for two hours to help keep you on task. The TEC group itself functions like a board, meeting once a month for the whole day. Once you identify a problem and resolutions to fix it, they’ll ask you continually about it until you take the actions.”
Dean Boring no longer worries about getting bored. “Seeing what other people are doing with better-run organizations, and what potential there is in other people, helps me realize we’re still not doing all we can,” he says. “Once you have that process going—and we’re still developing that—there really is no limit.”
Starting over
One novel way to rejuvenate family blood is to buy back the family business. Sperry & Hutchinson (formerly known as S&H Green Stamps) was launched in 1896 by Tom Sperry. His great-grandson Walter Beinecke III grew up hearing stories from his father, Walter Jr., who headed S&H sales and marketing, and his dad’s cousin, past president Bill Beinecke. But the family sold S&H in 1981 when the third generation began struggling with governance issues. Young Walter was in school then, but he cut his business teeth on a different family enterprise: a commercial and resort property management company. Later he struck out on his own with a string of entrepreneurial ventures in furniture manufacturing, real estate, custom plastic molding, venture capital and medical devices. Then in early 1999 Walter found a venture that truly seized his imagination: He pulled together a team of investors, including 12 relatives, to repurchase Sperry & Hutchinson itself.
It was more than sentimentality that inspired Walter to reclaim his family’s roots. “I had a lot of institutional knowledge of how trading stamps, points and mileage programs work to inspire customer loyalty,” he reasons. “A number of people had approached me and said I should think about [getting into] it.” But it was a radio commercial for an online company in the loyalty business that convinced him.
“My impression was they were totally screwing it up,” says Walter, “and if that’s the competition, then there ought to be a pretty fabulous opportunity for us.”
Although Sperry & Hutchinson is 104 years old, Walter views it as a startup. He and his new partners have launched a website, www.greenpoints.com (greenstamps.com was already registered by someone else). Since launching the program in early 2000, the company has landed more than 2 million registered online consumers, who can earn points by shopping at a participating bricks-and-mortar merchant, using the S&H Greenpoints credit card or shopping online through the S&H greenpoints portal.
Walter’s interest in the old family company was fueled by the Internet, which has been struggling with the challenge of creating customer loyalty. But the Internet is “just a piece of the business model, not the core,” he says. “We’re quite rooted in bricks and mortar. Our primary customers are grocers and shopping centers.” Walter has been forging partnerships from scratch with diverse companies like financial services (such as Fleet Bank, which put points on credit cards), groceries, online merchants and car rental and telephone companies.
As executive vice president, Walter gets to focus on the big strategic picture. “I manage all the long-term investor relationships, M&A and strategic planning for the company. And I’m the founder,” he adds proudly. “If I’m not excited about that, I’m not going to get excited about anything.”
Up from marinara sauce
As a six-year-old, Jimmy Rubino wanted nothing more than to work in Ralph’s, the legendary South Philadelphia restaurant (and Frank Sinatra hangout) founded by Jimmy’s great-grandparents, Francesco and Catherine Dispigno, in 1900. Jimmy begged his parents and uncles to put him to work 32 years ago, but “the old-time, temperamental Italian chefs wouldn’t let me in the kitchen,” he recalls. Jimmy was allowed to bus tables until finally, at the advanced age of nine, he was admitted to the kitchen. There he carefully watched everything the chefs did. Eventually his mother and uncles handed Jimmy an apron and began teaching him family recipes. He became a full-fledged cook by age 13, and he signed on full-time right after high school.
“I was born for this business,” says Jimmy, now a part owner with his brother, his mother and an uncle. “Never has a day gone by that I didn’t view this restaurant as my destiny.”
Yet about seven years ago his enthusiasm began to wane. The mystique of mixing 80-year-old recipes for marinara sauce had worn thin. The restaurant’s 100th anniversary was approaching, and Jimmy yearned to celebrate it by expanding in new directions. But working 60-plus hours a week for 20 years, dealing with employee issues and administrative trivia, sapped the time and energy he needed to implement his longer-term visions. “It was frustrating,” he remembers.
So Jimmy learned to delegate responsibility. First he hired Ronald Trombino, a non-family manager. Then Jimmy’s older brother Eddie, now 42, rejoined the business after working some ten years as an emergency-room nurse. What seemed old and repetitive to Jimmy was new and challenging to them. With Trombino and brother Eddie on board, Jimmy turned to a slew of new projects. He began planning a second restaurant, a 100th anniversary celebration, a cookbook and a quarterly newsletter for customers.
His first step for the centennial celebration was to hire a PR professional who inspired Jimmy to go beyond the usual parties and press releases. Instead, Ralph’s Restaurant began sponsoring a series of community fund-raising events, such as cooking demonstrations and formal sit-down dinners for local and national charities. A golf tournament sponsored by the restaurant netted $8,000 after expenses and lured more than 100 golfers. “Every vendor signed on as a sponsor, as did many customers who had their own businesses,” Jimmy boasts.
As for the cookbook, “For years I wanted to sit down at a computer and write all our family recipes. I was the first one to write them down.” Jimmy says it took him six months to write the book, including translating the family’s oral recipe for pasta sauce (which he had whipped up from 20 cases of tomatoes for the restaurant) into a recipe suitable for four to six servings. The cookbook was published in late 2000. Jimmy’s recipe for delegation might be harder for other business owners to whip up.
Shaking things up
Terri Faucher insists she hasn’t experienced a moment’s boredom since she took over Foshay Electric from her father in 1991. “It gets frustrating and stressful,” she admits. “But I wouldn’t call it boring.”
One possible reason: Within her family, she’s still a relative newcomer to the business, even at age 45. Although she’s the eldest of four siblings, Terri was the last to join the commercial and residential electrical contracting business her grandfather, Henry Faucher, founded in 1947. After leaving her previous career as a nurse in 1985, Terri heard of an opening in the family firm. Reluctant to claim special blood privileges, she filled out an application while her father, Donald Faucher, was out of town. No matter: Her identity was known, and she was grudgingly hired. The personnel manager “made it very difficult,” Terri recalls. “Employees initially felt, ‘Oh no, not another kid in the business!’”
There was no time for boredom in the early years. Terri not only got hired but also was boosted through the ranks because of her management skills. When her father began planning his retirement in the early 1990s, he hired a consulting firm to identify which, if any, of the four children, non-family employees or outsiders was best suited to lead the company. After several months of exhaustive interviews and tests, the consultants recommended Terri.
“I was surprised,” she remembers. “I said ‘OK, I’ll give it my best shot if I have everyone’s support.’”
Although she lacked her three brothers’ experience in the field, Terri began spending every Friday for six months getting exposure to job sites. She also streamlined office procedures and restructured supervision of the field staff to cope with growth.
Staying close to employees—“I try to meet with everyone soon after they start, and go on job walks a couple times a month, so I can talk with them,” she says—helped Terri recognize that they found some of their work tedious. She believes the best way to overcome that is to educate them about why each task is important. “Some things might seem menial, like paperwork or phone calls that must be done in a specific time frame. It’s important to explain why it’s well worth it. My reputation is to over-document things,” a trait that she says comes from her nursing background.
Foshay’s revenues have been anything but dull since Terri took over nine years ago—in fact, they’ve doubled.
Cutting the mustard
Ten years ago, the wheels almost came to a grinding hault for J.W. Raye & Co. The 100-year-old company, the last remaining mustard factory in the U.S. to cold-press whole mustard seeds, had been producing a mustard sauce that the dwindling local sardine industry had used for canning fish. Sales, hovering at about $55,000 a year, barely covered wages of the factory’s two employees, let alone maintenance for the equipment, which dated from the turn of the 20th century.
Nancy Raye’s father reluctantly considered bulldozing the building and selling the land. “That was going to be the end of a long history,” says Nancy, who was then 50 and working in the Merchant Marine in California. Instead Nancy decided to apply her prior experience in small business consulting to a last-ditch effort to save her family business. She moved back to the craggy Maine coast from California to resurrect the family business.
“I was old enough and had done enough things that I wanted to do something that would count for me, to build something that would be my legacy,” she says. Keeping her grandfather’s and father’s dreams alive provided her with that challenge. The drawbacks? “The level of risk and the amount of energy it would take,” she says.
To minimize the risk, Nancy mapped out a business plan: Instead of razing the building, she wanted to renovate the factory’s 19th-century system of stones connected to pinion and bull gears, pulleys and belts, powered by an overhead drive shaft. The restored factory would be opened as a museum. Next, Nancy planned to use her father’s and grandfather’s recipes for table mustard to create a line of specialty gourmet mustards. And the company’s Pantry Store would sell regional arts, crafts and foods—including the new line of table-top mustards.
Nancy initially managed to convince eight relatives to invest as silent shareholders. “The building and equipment were in pretty sad shape,” she says. “We needed to invest every dime we could get our hands on the first five years. We had to recapitalize twice, and we expanded the shareholder base to a total of 34 extended family members and friends.”
After the first five years in investment mode, the company now cranks out $500,000 in sales and has been profitable for the last two years. Instead of slipping into obscurity, this year J.W. Raye & Co. celebrated its 100th birthday. Despite the turn-around, Nancy hints that she’s still too insecure to get bored: “I still operate with my back against the wall.”
No more 100-hour weeks
Whenever Walter Teruya gets bored or fed up with his family’s 83-year-old tofu factory, he rekindles his excitement by going out in the field—specifically, the markets on the island Maui.
Walter, 48, joined Teruya Tofu Factory 20 years ago when his aging parents, uncle and aunt asked him to leave his job as manager of frozen foods in a grocery store on another Hawaiian island. Although he was glad to come home to the manufacturing and wholesale business, he’s still drawn to retail. Getting out of the factory inspires Walter to think of new products and promotional ideas. “I’m more bold and willing to take chances,” he says. “I can see what services and product they need at the store level. That’s where new products come along. The challenge is to create something as good or better, and cheaper” than new products he learns about.
Younger Hawaiians are more open than their elders to health-oriented products like fiber tofu (which adds fiber from soy milk) and gourmet products such as garlic and herb tofu. “We make a batch, give it away and get feedback from customers,” says Walter.
Until three years ago, Walter was working “baker’s hours,” coming in at 5 a.m. and working through the night. But three years ago, in response to doctor’s orders, he cut back from 100 hours a week to what he views as a more reasonable 70 hours. To make sure he still had time to visit retail clients, Walter took what he considers a bold move: He began ordering new equipment and hired six new people. He and family members train new employees on the job to teach them traditional manufacturing methods. His goal was to automate some processes but not all.
“Tofu is such a delicate product, and it’s physically demanding to make,” he says. “You can’t fully automate the process, so we still make it the old-fashioned, ‘correct’ way. It requires a lot of hand work.”
Although the second generation, including his father, uncle and aunt, retired five years ago for health reasons, Walter doesn’t mind that they visit regularly. “My dad, Saburo Teruya, still comes in and checks on us. That’s OK because it keeps them involved and busy. Staying home after working so hard all their lives would probably cause them to die early.”
Jayne A. Pearl is a free-lance writer in Amherst, Mass., and author of Kids and Money: Giving Them the Savvy to Succeed Financially, published by Bloomberg Press (www.kidsandmoney.com).