Family businesses in the list and insert brokerages
After 50 years of running a family business, I feel comfortable with describing its dynamics. Actually, I have experienced two types of family businesses: those with and those without children.
I can't tell what the future will bring for family businesses in our industry, but I do have some thoughts on how they will stay competitive.
The list brokerage/management industry is currently in a state of flux caused by sales and mergers which, for the most part, are family businesses cashing in.
If you review the larger brokerage concerns (those that have not sold out), you will observe that almost all are family operated. Certainly, entrepreneurs run almost all, with the exception of those that recently sold out to InfoUSA.
If you dig deeper and define family as husband and wife and/or parents and children, about 40 percent of the top 25 list brokerage/management firms fit the description.
For example, you have Singer, Zed, Stanton, List Services, Chilcutt, Lake Group, MDA and Dunhill, to name a few.
Family businesses have one or more attributes that other businesses do not have. One is pride of ownership. Whether it's a restaurant or list brokerage firm, you can sense the pride the owners take in their businesses. This pride is not only evident but has an element not necessarily available in corporate domains.
Another attribute in family businesses is the cooperation among principals. Marriage in the business world is very similar to the marital world: husband and wife in a strong marriage sense the needs of one and other; their business needs follow the same pattern. Family members tend to look to each other for support.
Protection of capital is another issue for family businesses. By definition, business is about risk. In fact, many risks ranging from the business chosen, the business plan, cash management and so forth. Family businesses tend to be conservatively run.
Mailers have historically chosen brokers with whom they can be compatible and as in most sales situations, the customer tends to stay with the salesperson as he or she moves within the industry. Family businesses by definition don't move on - although they do move office locations - so mailers tend to be loyal to family businesses.
The list and insert family businesses now have the extra competitive element of the merger activity taking place. This, coupled with the new firms being established by enterprising entrepreneurs makes for a very interesting competitive environment.
I would also add that the Google/Yahoo advertising sales initiative provides a further competitive issue.
The attributes described above - pride of ownership, cooperation, fiscal conservative and steadfastness - will, I believe, continue to be the bedrock of the family businesses in our list and insert industry.