FOXBUSINESS.COM PROFILES ENTREPRENEURS AGE 35 AND YOUNGER

More than 80% of businesses in America are considered family-owned, according to the Cox Family Enterprise Center. But as Professor Lloyd Shefsky of Northwestern’s Kellogg School of Management points out, only 30% of these family enterprises survive the transition from first to second generation. So the obvious question is: What gives a family business staying power?

When 31-year-old Harvard graduate Ada Polla decided to get into her family’s business, she didn’t just hit up her father and mother for a job. "I wanted to get some kind of outside work experience first…and prove to myself and to my parents that I could go and find a paying job outside of the family,” says Polla.

And she did just that, going to Georgetown's business school and working in the beauty industry before eventually joining her parents’ skin-care line, Alchimie Forever, in 2004. Her dermatologist father never intended the line to go any further than his own patients, but Polla eventually repositioned the products and placed them in top department stores like Henri Bendel and high-end pharmacies.

Saurabh Abrol always admired his Indian-born father, Arun Abrol, who had risked $60,000 -- his family’s entire life savings -- to start Wine Chateau, a mom-and-pop liquor store with three branches in New Jersey. Now, with the help of Saurabh, who built out the business online, sales are close to $15 million.

“I was always interested in computers,” says Saurabh, but he wasn’t excited by his father’s brick-and-mortar operation -- until he realized he could put the two together. In the last five years, the younger Abrol has used his tech know-how to expand on the fundamental business built by his father. “My father taught me to have great pricing… pass the savings I get from the distributors to the costumers,” says Abrol. “But my computer science background really helped me to figure out how to generate sales online.”

Abrol recommends marketing through Google (GOOG), Yahoo (YHOO), and shopping-comparison sites, and he also says it’s vital to hook up with other related Web sites -- like wine blogs -- willing to exchange links.

Taking what the founders have achieved and expanding on it requires more than digital savvy and a new vision, however. To make a family business endure, Professor Shefsky says that both the founders and their children need to express their expectations. “The key to it is communication,” he says. Bill Matassoni, CEO of OMBI Consulting, who has worked with family businesses for years, agrees: “You have to wear three hats -- you have to be a savvy business person, you have to be an owner, and you have to a family member. That get’s complicated….”

Polla says it’s important to have a balance of power, explaining that while she is the president and CEO, her parents still have an insurance policy. “My parents are majority shareholders -- so I make the ultimate decision, but if they really think that I’ve gone completely wacko they have a resort to save the business in spite of me.”

Matassoni agrees that this is a good idea in the first couple of years. But ultimately “you’ve got to put something in place that over time the ownership structure changes because it’s a matter of who is contributing and who gets rewarded.”

And while he doesn’t believe generations get better at running businesses, Matassoni says he doesn’t necessarily think nepotism is a bad thing. 

“It can actually be a good thing,” he says, “just as long as your son or daughter measures up.”

THE SIX SHOOTER

1. Where were you the moment you decided your business plan?

POLLA – I was at Georgetown Business School, in the “Fish Bowl” (the lounge cafeteria area) after scrapping my original business plan (which was to open a medical spa in Washington, D.C.).

ABROL – I was at my sister’s place talking to my brother-in-law who works at a Fortune 500 company bouncing ideas off of him. He is a smart guy and gave some great ideas on how to develop my business plan.

2. What was the one thing you didn't know that you had to bluff your way through? 

POLLA – When I was in business school, I did a mock presentation of my Alchimie Forever business plan to a panel of potential investors. While I thought I knew my financials, their questions were much more detailed than I had expected, and I bluffed on quite a few numbers. Needless to say I don’t do that anymore! I know my numbers inside and out.

ABROL – I didn’t know too much about wine… Eventually I developed the love for learning about it, and now I try to keep up with its ever-evolving industry.

3. What one life lesson did you learn that helped you build your business?

POLLA – Don’t be fooled by appearances. I was at a department store in New York City browsing and saw a man enter who looked almost like a homeless person. But given the staff’s reaction, he was clearly a frequent shopper, and indeed left with two bags filled with goodies. That experience made me realize that every single person is a potential client, even if they don’t look like it!

ABROL – Hard work! I saw my parents do it when we migrated to America so I learned this from them.

4. Who is your role model or inspiration?

POLLA – I am fortunate enough to have many models and sources of inspiration in my life, in particular women who have succeeded in life and business. Today, I woke up thinking about Estee Lauder, and how she built her business to the billion dollar empire it is today, through thick and thin including the Great Depression.

ABROL – That is a very good question and a very easy one: I would have to say my father. Seriously without his teachings, I would not be in this position to even answer these questions.

 

5. What do you wish you had more of: time or money?

POLLA – Money! Money would enable me to develop my business more aggressively -- and in effect, money can buy time (I could hire a slew of people and delegate some of my responsibilities, for example sales, and thus free up time to work on the high-level strategy for Alchimie Forever).

ABROL – Time. I mean, I am so blessed with everything an just wish there were more hours in the day for me. With extra time, I could work hard and also spend my time

6. What is the one word your employees would use to describe you? 

POLLA – Hardworking.

ABROL – A friend.

 

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