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FOR BROKERS: Family Business BY BARBARA BALLINGER
Lonergan Insurance & Real Estate Agency, Medford, Mass. The Longerans have defied the odds by keeping their family real estate and insurance business going strong for three generations. Owners, John, 65, and Judy, 62, cite the close bond between them and also with their younger family members as a reason the business founded by John’s late father has survived. The next generation includes son Jay, 27, daughter-in-law Liz, 35, and nephew Jamie McManus, 27. “John and I are both from large families where we learned to compromise,” says Judy, who’s been married to John for 38 years. “That’s something we taught our own children, nieces, and nephews.” They’ve also worked smartly. They added the real estate business in 1978 to the insurance business that John’s father had started in 1919. Each niche helps to offset the other during down cycles. The Lonergans never pressured their three children to join. In fact, they were surprised when Jay, the youngest, expressed interest after working for MTV in New York. “I told him I’d love it but wanted him to know there’d be times when he’d be well off and times when sales wouldn’t come in,” says John, who joined his mother in business after he graduated from college in 1961, seven years after his dad died. “It was up to Jay to make his way, and if he decided not to, I told him we’d still love each other.” The senior Lonergans plan to address succession formally with their accountant, though John hopes to keep working as long as his late mother did. She stopped two weeks before her death at age 91. He and Judy have also made it clear to their two children not working in the business that it belongs to Jay and Liz, and possibly to Jamie. Jay will oversee the real estate side, which has five salespeople; Liz will run the insurance business, which handles property and casualty claims. The other children will inherit other assets.
Stefik Realty Co. Inc., Niagara Falls, N.Y. Most heads of public corporations would’ve retired long before age 80. But Robert Stefik, head of Stefik Realty Co., is still running the company he founded in 1948. He has tapped a successor—the youngest of his five children and the only one interested in his residential and commercial brokerage business. David, 37, started his career in the golf industry but 14 years ago decided that his financial background offered a good fit for his dad’s company. “My father had good people working with him,” David says. “He didn’t want them to think I’d be thrown leads and given preference. He knew it was more important for the business to succeed than for me to step on other associates’ toes.” He joined anyway, hustled, and tried to show no sense of entitlement. His father remembers David’s first few years: “He came in the 1990s when there was tremendous business, and I liked having him. He’s professionalized operations and paid his dues,” says his father, who isn’t leaving succession to chance. He added a codicil to his will that says David will take over. He’s also given him a small equity stake. David, too, is thinking ahead. His biggest concern is the ability to secure listings, since the city has lost significant population in the last 50 years and there are more real estate competitors; he’s also not sure who’ll take over from him since he doesn’t yet have children. “But you never know,” says Stefik, married for four years.
ERA King Real Estate Co. Inc., Anniston, Ala. Is entrepreneurship passed along in the genes? Maybe. The owner of ERA King Real Estate Co., Everett King, joined his late father Jack in business straight from college in 1978. “I liked the flexibility of being an entrepreneur,” says Everett, whose city is about 60 miles from Birmingham. Everett’s grandfather, Thomas Marvin King, known as T.M., deserves credit for the original burst of entrepreneurialism. In the 1940s, he started a hardware store, which became a small chain. His son Jack came on board after college but didn’t like being stuck in a building selling tools, Everett recalls. He started Jack King Realty in 1969 to build and sell homes on the side and eventually made it a full-time venture. Soon after Everett came on board, he knew he had to add his own imprint to help the company grow, so he added property management to the mix of building, buying, and selling houses. He also showed how to blend a diverse group of family members at work. “You’ve got to constantly change a business to keep things fresh. The business was different 10 years after I joined and will be different a year from now,” says Everett. It now numbers 42 sales associates and a staff of 16 in four offices and includes a large circle of relatives and potential successors. Everett’s wife Anna, ABR®, joined 12 years ago after working in the textile industry. “I encouraged her,” Everett says. “She thought real estate was nothing more than showing houses to women, but I said, ‘Give it a year and see how much more it is.’ She did, and this year at ERA’s annual convention she was named its top ‘all-around’ sales associate in the country,” an honor for the person who demonstrates excellence in several categories, including total units closed, use of ERA programs, and customer satisfaction, according to ERA management. The business also includes Anna’s twin sisters, Sylvia and Cynthia; one sister’s son and daughter-in-law; Anna’s son from a prior marriage; and her ex-husband. “He got his license about one-and-a-half years ago, after working for a mortgage company. He called Anna to ask where he should work if not for our company. She said, ‘I wouldn’t work for anybody else. Talk to Everett about working here.’ I had nothing against him,” Everett says. “Anna and I have been married 17 years, and I knew he’d be a good salesperson. He is.” How does this blended family work so well together? “Each family member is motivated by something, and we all get along,” says Anna. “But nonfamily are as much a part of this business as family. Without our sales associates, we’d have no success.” The company continues to follow Everett’s mantra of change. His goal: To become the largest brokerage in Alabama. Although he and Anna have no plans to retire, they’ve got an ace, they believe—their 15-year-old son Jackson, who’s expressed interest in moving the company into another generation.
GE Realty, Thousand Oaks, Calif. Gary Ericson, CRS®, GRI, 62, was determined not to pressure his daughter and two sons into joining the business he started in 1979, after serving in the Navy and then managing other companies. “I wanted them to go out and find what the world is made of on their own. But I also told them I’d love to have them if it seemed right,” he says. All three graduated from college and pursued other professions. His daughter Kendra still works for an independent mortgage company. Sons Gary, 35, and Gregory, 38, joined the business within the last seven years. The senior Ericson credits the partnership’s success to multiple factors: carefully training his sons well in all the dos and don’ts of the business, putting everyone on commission so there’s less competition about who earns what, eschewing perks such as cars and country clubs that add a sense of entitlement, staying small to remain close to clients and avoid layers of management, and emphasizing the “family” part of the business in ads to connote integrity and longevity. With the advice of his accountant and attorney, Ericson incorporated and decided that Gary Jr. eventually will run the business since he’s more experienced. “If my sons want to share management, that will be their decision,” says their father, who expects the business will move into the third generation after a grandson, Trevor, 20, graduates college this summer.
Lakewood Realty, Madison, Wis. Tammy Warren, ABR®, a science major in college, had no intention to join her mother Dolly Warren, ABR®, CRS®, in the real estate company Dolly founded 20 years ago. But after traveling for a year following her graduation, Tammy came home and got her real estate license, “just to help out when my mother was busy,” Tammy says. Dolly tried to discourage Tammy, telling her to work first at a large company so she’d see another person’s viewpoint. Dolly also worried about training her daughter. “I think I’m very set in my ways and highly detail-oriented,” she says. But Tammy persisted and won out. Five years later they’re partners who frequently go on listing appointments together and split commissions. “It’s fun to work with your mom,” Tammy says. Her mother is quick to repay the compliment. “She’s got the right personality and has become detail-oriented. But it took getting used to, especially in the training. Sometimes I’d have to remind her, ‘Now, Tammy, who’s the boss?’” Seven months ago Tammy’s fiancé Ted Krez left software sales to join the Warrens. Although Dolly hasn’t written a succession plan and retains all equity, she’s thinking about how a transition will occur. “I know it’ll happen, and I’m grooming Tammy in case that day comes sooner than expected. At the same time,” she says, “I want to work as long as I can contribute.”
Neumann Real Estate, Ridgefield and New Fairfield, Conn. Many family businesses come unglued in successive generations, as relatives fight over responsibilities, leadership, and compensation. Five Neumann siblings are working together by following a formula developed by their father Harry Neumann, GRI, 74, who’s still active in the business he founded. Harry modeled his strategy after the service-oriented Ritz-Carlton Hotel Co. “Our sales philosophy is to make buying and selling pleasurable. We consider the front desks at our two offices the equivalent of concierge stations,” says Chip Neumann, 48, CRS®, who joined the business right after college, as did brothers Russ, 47, Jeff, 45, and Bob, 41, and sister Shaylene Neumann Mallozzi, 40. Shaylene’s husband Joe, 41, also works in the business. Only Janet, another sister, decided to work elsewhere. Chip’s oldest daughter, Heather, recently joined. The second generation developed its partnership by melding their different strengths, says Chip, who oversees marketing for the 20-member staff at the offices, which are 20 miles apart. There’s no daily or long-term competition about who earns how much, since income is based on commission rather than seniority. Shaylene is the exception. She receives a salary for overseeing office technology and relocation. Most important, all the relatives agree that Russ is the best one to lead. Key Succession Issues Q:What are the most critical considerations when you plan for succession? When women run the business More family business owners are considering a once-ignored pool of successors—wives, daughters, sisters, and other women, says Nan Langowitz, faculty director of the Center for Women’s Leadership at Babson College in Babson Park, Mass. Once in charge, many women make a significant difference on the business, according to a 2003 report, Women in Family-Owned Businesses, which examined the women’s influence as owners and leaders of family businesses.
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