Crains New York Business – Secrets of century-old businesses

Eric Modell Crains

Crains New York Business – Secrets of century-old businesses

By Anne Field
October 23, 2011 5:59 a.m.
Source crainsnewyork.com

In the late 1880s, George Modell, an immigrant from Russia, started selling jewelry, musical instruments and other wares from a pushcart on the Lower East Side. By 1893, he’d parlayed that venture into a pawnshop.

Seventy years later, his son Louis moved the business to the fledgling diamond district on West 47th Street, turning the enterprise into one that dealt only in jewelry. When Louis became ill, his son Gerald, then a diamond dealer, took over.

With 10 pawnshops throughout New York City and in excess of $35 million in revenues, the profitable 55-employee enterprise is still going strong, according to Eric Modell, Gerald’s son, who became president of Modell Financial Inc. last February.

“We’re looking forward to another 100 years in business,” he said.

Eric Modell is one of a small group of local business owners running companies, many family-owned, that are 100 years old or more. Among roughly 500 such businesses in the metro area, the majority are in New York City, says Clint Blume, president of The Hundred Year Association of New York—a group of for-profit and nonprofit enterprises that have been in operation for at least a century.

Many share some notable characteristics that have contributed to their longevity, observes Edward Rogoff, chair of the Department of Management at Baruch College’s Zicklin School of Business.

“They’re flexible, they’re hands-on and they run their businesses conservatively,” he said.

To be sure, simply surviving for 100 years isn’t a sign of success. The real test is whether the companies have been able to adapt and even grow during both upturns and downturns. These hardy enterprises offer valuable lessons for small business owners looking at how to make their businesses last.
TIP ONE: They’re receptive to change

One factor contributing to the long lives of these enterprises has been their owners’ willingness to adapt their strategies or business models to an evolving marketplace.

For instance, Long’s Bedding & Interiors started out in 1911 as a Harlem factory that refurbished and manufactured mattresses, during an era when consumers usually bought renovated, not newly made, mattresses.

As times changed, Harry Long, the son of founder Max Long, saw greater growth potential in becoming a retailer. In 1936, he opened a store on the Upper West Side to sell his products; eventually, he closed the plant in order to focus entirely on retail.

Now run by Harry’s son Bob, who took over in 1963, the profitable 12-employee company posted gross sales of well over $3 million last year.
TIP TWO: They understand the demands imposed by their hometown

In some cases, an ability to adapt to New York’s unique environment—including its space limitations—has been essential to long-term success.

When George Modell founded his family’s business, he started out eschewing large items because he didn’t have room to store such goods. That necessity also played a part in his son’s decision to focus only on jewelry, which doesn’t take up a lot of room—although the desire to specialize was also important.

“Storing a bunch of musical instruments or power tools is very difficult in New York,” said Eric Modell. “Plus, I’m happy to deal with materials I’m an expert in and leave it at that.”
TIP THREE: They never forget what they’re best at doing

While they remain flexible, these firms’ leaders have generally stuck with their core competencies.

In 1886, Irish immigrant John Gallin started his construction company, John Gallin & Son, to specialize in commercial interior alterations. Now run by President Mark Varian—who is a Gallin descendant—and three of his cousins, the company has never veered from that focus.

“We have kept within our niche, doing what we know best,” said Mr. Varian, whose company, with about 22 employees, brought in roughly $60 million in revenues last year.
TIP FOUR: They remain in touch with the customer

Efforts by management to stay in the trenches have also played a part in these companies’ ability to last, keeping executives in touch with the realities of the market and what customers want.

According to John Gallin & Sons’ Mr. Varian, for example, one company principal is involved in every construction project.

“We make sure the workload is at a level where we can ensure that consistently happens,” he said.

As for Long’s Bedding, “There is always a family member in the store,” said Mr. Long, whose daughter, Terri—who hopes one day to take over from her father—joined the company 14 years ago.
TIP FIVE: They engage the next generation

These enterprises have also figured out a way to beat the odds and attract young generations to the family business. Mr. Long, for one, decided to get his feet wet working in the factory as a teenager.

As for Eric Modell, he took a job as a management consultant with PricewaterhouseCoopers after graduating from college. Then, 10 years ago, knowing he wanted to change careers, he consulted his father for advice.

Over a two-hour lunch, much to his surprise, Modell père suggested that Eric join the business in a management position, discussing everything from the importance of carrying on the family legacy to the appeal of working for a small firm.

After thinking it over for a week, Mr. Modell decided to accept his father’s offer.

“I have no regrets,” he said.

A version of this article appeared in the Oct. 24, 2011, print issue of Crain’s New York Business.
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