‘We’re not allowed to talk business at the table’

Four generations in the scrap business. First, metal. Now, used-car parts.

Ross Kogon's family has defied the odds for entrepreneurs who want to pass on their business to their offspring. Most family businesses are lucky if they can survive two generations. In Kogon's case, at least five appears likely.

Kogon, 37, is president of Atlanta-based Pull-A-Part, a growing business where customers walk around neatly organized rows of end-of-life cars to remove parts for their vehicles. The self-service concept, which can save mechanics and tinkerers considerable amounts of money, has generated more than $100 million in revenue from 25 yards around the country.

Kogon and his cousin, Gregg Cohen, who heads marketing and new initiatives, hope to double sales in five years. Kogon discusses how his family worked together, established key rules and learned from one another, starting with his great-grandfather.

Q: Would you please describe your business?

A: We're trying to change the image of the old auto parts yard in the same way as Home Depot and Lowe's changed the expectation of the ma-and-pa hardware store.

We want it to be clean, we want it to be organized, we want it to be pleasant for our customers. We want to make sure they have the selection that they need.

We have rows and rows of cars that are 10 years and older — 1,500 to 2,000 cars on each yard. We have 25 yards in 22 markets around the country. We’re buying several hundred-thousand cars a year. There’s a constant rotation — 25 to 30 cars come in and out of each yard every day.

Our customers have to be people who can work on cars. A lot of people like to turn their own wrench.

We want to keep it simple. That’s one of the reasons we have the pricing that we do. An alternator is $26. Whether it’s a Yugo or a Lamborghini, that alternator is going to cost the customer the same thing. It makes it easy for our cashier and the customer.

Q: Your family didn’t start out in this business. How did the family business begin?

A: My great-grandfather and his brother came over from Poland around the turn of the last century. They quickly got into what could be salvaged. All you needed back then was the ability to work hard and pull a cart. It was a schlepping business. They got into finding junk and trying to sell it.

They got into scrap metal, and in 1917 formed Central Metals in Atlanta. It was an aggregator that would collect metal, cut it apart and sell it to a user like a manufacturer.

Later, my grandfather and great-uncle came into the business. After that, my father, my uncle and my cousin did. Eventually, in the late 1990s, they started this business and sold the scrap business.

What I learned was that there was a willingness of the older generation to give rope — real rope — to the next generation to prove themselves. They gave the younger generation a lot to do, so there was a natural growth. They didn’t hold on too much or let go too quickly.

Q: What are other lessons that entrepreneurs might learn from?

A: They thought generationally. My grandfather would say, "We built the business for our grandkids to run."

That means when you’re making investments, the horizon is very different and you’ll make different decisions. It always stuck with us — to build a business generationally. I’m figuring my kids and grandkids are going to be running this in 40 years. I’m not going to take shortcuts. I’m here for the long haul.

Also, one of the things I grew up hearing was that management had to kick the rocks out of the way of the employees’ feet, so they could get their work done. Don’t put up impediments for people.

Q: What else?

A: We like to have our disagreements before we're actually having a fight. We think about the possible tension points that can come up from a family point of view.

The big things that have come from that are policies, such as you can’t join the family business before you’ve been out working in the world productively for at least five years after college. That came out of a long series of discussions.

Also, if there’s a business dispute among family members, we have a dispute resolution process. It is frankly designed to be cumbersome and aggravating to the point where it’s more productive to work out our disputes so we don’t have to go to that level. It involves mediation and is bureaucratic by design.

One other thing that I think is important — we’ve made our family more than a business. We’re Jewish and every Friday night our family gets together for a Sabbath dinner. And we’re not allowed to talk business at the table, even though there are a lot of us. Three branches of the family have an ownership stake.

It forces you to bond over something else. If something is happening in the business, it’s not the end of the world. The family exists for the family and the business may be a part of it. But they’re not the same thing. It allows you to make smarter decisions, both for the family and the business.

Q: Entrepreneurs often stumble as they attempt to grow. How can that be avoided?

A: You have to begin thinking about how you build a business so it doesn't need you to do all the things that have to get done. If I had to be the cashier, I could never think about how to grow to 25 stores.

You have to think about — how do I set up my business as a system? Even if it’s a single store, you have to think about how you would set it up for scale.

You have to draw a picture of what it might look like with 10 or 15 stores, so you can understand the gaps you now have. For example, you’ll need some real managers and some real management training. You’ll need to learn how to lead other leaders. That’s not easy.

Also, you have to prioritize. Focus on two or three core things. It’s very hard to do, but it will limit your success if you don’t do it. The lack of management attention (to priorities) may be the biggest constraint to success.