We are Family
Navarra’s father opened a downtown San Diego furniture store in 1954. He brought his son into the business 16 years later. Today, Jerome, 56, is president of Jerome’s Furniture, and owns the chain—with five stores and one of the largest furniture inventories west of the Mississippi—with his two sisters. Steve Jacobs’ dad opened a dry-cleaning business on Voltaire Street in 1946. Today, Steve, 55, runs Embassy Cleaners much as his dad did, right down to the drive-up window that since day one has been the operation’s signature. Some of his best customers, Jacobs says, have known him since he was a boy.
“They’re all getting older,” he says, “but I’m getting a lot of their kids and their kids’ kids, second and third generations.” Jim Jessop’s great-grandfather opened a jewelry store downtown in 1892. It stayed in the family until the 1970s, when it was sold to a national chain. But George Carter Jessop, Jim’s dad, subsequently returned to the jewelry business under his own name. And today, more than a century later, Jim, 52, carries on the family legacy by grading diamonds, polishing gold and counseling nervous young suitors about what to look for in an engagement ring.
“It’s really fun knowing my family has had tenure in the jewelry business,” he says. “They were great people, dynamic in the development of San Diego, and to be riding on their coattails is really a tremendous honor.”
Keeping a business “all in the family” can be challenging. According to oft-quoted research from Family Enterprise Publishers, 30 percent of family businesses make it through to the second generation, 10-15 percent make it through to the third, and just 3-5 percent last four generations.
Further clouding the picture is the growth of national corporations and what the media calls the “chaining” of America. All over the country—San Diego is no exception—the big supermarket chains wiped out mom-andpop grocers. Huge discount chains like Wal-Mart and Target Stores killed the family-run dime store; Home Depot and Lowe’s sent neighborhood hardware retailers packing; and Blockbuster ran independent video retailers out of business. Now, we’ve got Starbucks popping up on every corner, driving out the bohemian and neighborhood coffeehouses.
Raymond Archard, the third-generation owner of Al Archard Inc., an El Cajon tire company his grandfather opened in 1945, can tell you firsthand how tough it can be, going head-tohead with the big guys. A few years back, Archard lost a lucrative account, supplying tires to a fleet of delivery trucks for a furniture company, when the furniture company decided to lease the vehicles rather than maintain its own.
“When you’re dealing with a big leasing company like Penske or Ryder, they like national contracts with a Goodyear-owned store or a Michelin franchise store, so we lost the account,” Archard says. “Being an indie can be very difficult.”
“We’re still hanging in there, which isn’t an easy thing for a small businessperson to do when you’re surrounded by Wal-Mart and other big chains,” says Lucy Goldman, who with her brother, Michael Recht, runs Yardage Town, a chain of 13 fabric stores their parents launched in 1953. “All these discount stores are importing stuff from China for cheaper than you can make it.”
Even so, San Diego still has a healthy population of stubborn, family-run businesses that have bucked the national trend and hung on, in many cases precisely because of strong family ties that tend to weather crises better than singleminded corporations that look only as far as the bottom line.
THREE GENERATIONS of the Coles family currently are active in Coles Carpets & Fine Flooring, a homegrown business born in La Jolla in 1947 as Coles of La Jolla Complete Home Furnishings. Founder Hubert Coles had come to San Diego with the Navy during World War II and, after the war, decided to open his own business; he had previously worked in his father’s furniture business in Arizona. The Coles store moved to San Diego in 1965 with a new focus on floor coverings and draperies. Sons George (now president) and Steve (vice president) joined the company in 1972.
Over the past 30 years, they’ve built Coles into a floor-furnishings behemoth, with the West Morena store quadrupling in size to 40,000 square feet, and branch showrooms opening in San Marcos, El Cajon and Solana Beach.
George Coles says the best thing about being part of a family business is the freedom. “I’m able to take my dog to work with me,” he says with a laugh. “It’s an opportunity to really create the kind of customer service my family has always believed in. We don’t have to keep Wall Street happy. We don’t have a CEO in an ivory tower in another market and venue telling us how he thinks we’ve got to keep our customers happy. Also, I get to work as hard as I want.”
The down side: “You never really close the door. It’s with you all the time, 24 hours a day, and I think the challenge is dealing with yourself and learning to give yourself a rest. It’s a question of how much you take home with you.”
In addition to the Coles brothers, who co-own the business, Coles employs sisters Jane Kuczwara and Chris Coles and nephew Greg Garramone, Chris’ son.
George Coles takes a defiant attitude toward the national chains encroaching on specialized, independent flooring companies such as his. “Home Depot’s Expo tries to compete with us,” he says “but they have a long way to go if they really think they can nationalize customer service on the level that we do, catering to a very discriminating clientele. The big-box stores just cannot get the loyalty of employees and customer repeats like a family operation.”
I’D SAY WE’VE ALWAYS BEEN ABLE to stay one step ahead of the other guys,” Jerome’s Navarra says. “The family has worked very hard at this business. We’re not perfect, but from one year to the next, it always gets better. The family has invested a lot of money, continuously, into the business. Four of our five stores have now expanded into what we call superstores, and the fifth superstore, in El Cajon, is now under construction. We’re also going to be moving into a new distribution center in a few months that is almost 400,000 square feet.
“We’re always moving forward, and the advantage of family members is that they are very predictable. We can pool our resources, work hard and all focus on the same goal.”
Beverly Mascari agrees. Since 1988, she’s been part of a troika of cousins running Anthony’s Seafood Group, a chain of seven restaurants founded by grandmother Catherine Ghio in 1946. “We’re the third generation,” she says. Her mom, Adell Weber, worked in the restaurant from the first day, as did brothers Anthony and Tod Ghio. Now the kids are in charge—Rick and Craig Ghio—and over the past 16 years, each has found his or her niche. “Rick is a great administrator, Craig is infinitely skilled creatively and does restaurant operations and art design, and I’m really good with people, so I do all the guest relations,” says Mascari, 62. “It works out really well— we appreciate in each other our strong points and take that niche as our own.” Mascari believes the prime advantages of being in a family business “are that you know who you are working with, what they’re like, so you can speak openly and freely. And you can depend on them; everybody pretty much wants the same results.”
“No one can fire you,” Lucy Goldman adds. “When I was a teenager, I worked in the store, and my son, too, grew up with this business, so you just know it really well. Most of our employees have been with us for many years, and we’re all like this big family. It’s the antithesis of the corporate setup.”
Archard agrees. “In a community like this, everybody knows who you are,” he says. “They come in all the time, people I went to high school with and even grammar school.”
THIS IS NOT TO SAY there are no disadvantages. “Sometimes there’s a breakdown because everyone’s an owner and everybody has an opinion,” Mascari says. “The fact is, the three of us work really well together, but we had to learn to do that.”
“I think the biggest disadvantage has to be allowing disagreements in the family business to affect the family’s relationship,” Navarra says. “There are times when you feel like you’re walking on eggshells, but we’ve managed to keep everyone civil and talking and working together.”
Archard recalls that “It was very hard growing up in a family business. I had to work harder and was paid less, working side by side with someone who had maybe more experience but wasn’t able to produce the same quality of work.
“And we were always working, it seemed—the whole family. My mom worked every day doing the books, and my dad would close the store every evening at 6, come home to have dinner, and then go back and work until 11 at night in the retread shop.” He also remembers a lot of friction between his dad and his granddad. “It was a struggle for them, working together,” Archard says. “Ultimately, they had a power struggle, and that’s when my dad told his dad, ‘Look, this is how it’s going to be, or I’m out of here.’ A year later, he wound up taking over the whole business.”
One of the biggest challenges of running a family business is keeping the kids interested. It’s not like it used to be, when Junior was groomed for the business and automatically took over when Dad retired. Embassy’s Steve Jacobs worked alongside his dad as a boy and says he didn’t think twice about taking over the business in 1969, when he turned 21. But his daughter, a schoolteacher, isn’t interested, so when it comes time to retire he’s going to sell.
Lucy Goldman’s son, Dean, has been working at Yardage Town for 20 years and will likely take over when she and her brother retire. But so far, none of her 10 grandkids—the eldest just entered college—has shown much interest. “We’re just going to have to wait and see,” Goldman says. “One grandson worked over the summer, reluctantly. He’s like all the kids—they just want to make some money, and as soon as they make some money, they’re gone. But they’re still young, so who knows—although we certainly aren’t going to push any one of them.”
Archard has two daughters, and the youngest, 17-year-old Jenna, works in the shop every day after school. “She likes the business,” he says proudly. “She works every day at the retail counter and knows all of our accounts. She would like to step in and put me in retirement one day.”
Jim Jessop says even as a boy he knew he wanted to take over the shop from his dad. In the eighth grade, he did his school report on the jewelry business, interviewing his grandmother. He hung around the shop a lot as a boy, and remembers being “particularly fascinated with watchmaking—to the point where I collected up some old pocket watches, took them apart and put them back together again, just for fun.”
So far, none of his three sons—17 to 22—has shown a similar predilection. “I’m sure my oldest son isn’t interested,” Jessop says, “and whether the other two might, who knows what might happen there. One thing I do know for sure is that there is no way I can push them into the business. They’re either going to do it or not.”
Jerome Navarra has three kids: Adrienne, 29; Jimmy, 26; and Mark, 23. “The eldest one has worked here parttime, but this isn’t her career,” Navarra says. “The two boys, however, are considering it—in fact, they are tasting it as a career right now. I think they like it; and I also think they’re prewired to do it.”
Should any of the young Ghios decide to enter the restaurant business, Mascari says, they’ll need to get their experience somewhere else before they join the team at Anthony’s.
“We have a rule that you have to work five years outside the business before you come in as an owner,” she says. “After you get your college degree, hopefully in something that will be helpful to the business, you get the experience of working for someone else besides the family.”
It’s an “invaluable” rule, Mascari says. “When you grow up in a family business, you may not have the respect or the credibility [from the outside],” she says. “You’re just Daddy’s son or daughter. But after you work outside and you come in and you bring something to the business, then it’s much easier to assimilate.”
WHEN HE FIRST BEGAN teaching a family business course nine years ago at the University of San Diego, Dr. Scott Kunkel was considered a bit of a maverick. “It was one of the first 15 or so family business courses in the world,” he recalls.
But now, such courses are popping up at business schools all over the country, though his is still the only one in San Diego County. And it’s about time, Kunkel maintains. Family-owned or -dominated businesses account for about 80 percent of all businesses in the United States, Kunkel says, including 175 of the latest Fortune 500. And it’s gratifying to at last see them get a little respect in academia. “Family businesses have been around as long as human beings have formed organizations,” Kunkel says. “Families have long dominated business, and yet we didn’t recognize them as being a major influence in business until just the late 1980s. Before that, we kind of took the attitude that family businesses were all little mom-and-pops that didn’t have much of an impact, very much like we used to see small businesses as being unimportant.
“For years, it was the industrial giants we looked at for employment and economic progress; we thought big corporations made the economy run. It wasn’t until the 1970s that we realized most employment comes from small firms, and most innovation comes from small firms. And guess what—next, we realized most of the businesses in America are family-owned, and that they are not just ittybitty mom-and-pops but some of the most important and influential businesses in this country, including Ford Motor Company and DuPont.”
Kunkel’s Family Business course at USD discusses ways in which family-owned businesses are unique and addresses some of the specific challenges they face that other businesses don’t—such as grooming a management successor from within the family; implementing an estate plan to pass ownership of the business to sons or daughters while avoiding the estate tax; resolving family conflicts that erupt in the business and business conflicts that threaten to destroy the family; setting fair compensation for family members and non-family employees; and motivating nonfamily employees to support the family’s goals.
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