How One Family Business Strengthened Its 'Core' -- and Saw Profits Take Flight

Nick Tarascio knew something had to change quickly at his business, Ventura Air Services in Farmingdale, NY. Tarascio's parents had started it as a tiny flight school with one airplane in 1982. With Tarascio working in an executive capacity since 1994, they grew the firm -- which offers charter flights, flight training and aircraft maintenance -- to more than 30 employees. Then the global financial crisis hit. "We were struggling and didn't know what we needed to do next," says Tarascio.

Tarascio realized he needed some coaching to navigate the situation successfully. He'd taken the role of CEO of Ventura Air Services in 2007 at age 27. It was a natural evolution. He had grown up tinkering with engines in the basement with his father, an avid pilot, and worked in the business since he was 19. Tarascio learned all he could about business management by reading books and joining the Entrepreneurs' Organization (EO), but as the company struggled, he realized he needed more help to lead it effectively. He didn't know how to hold employees accountable for achieving goals critical to the firm's growth.

Tarascio's situation is common and will become even more prevalent, as Baby Boomers pass the baton in their businesses to the next generation of leaders. Many people think family-owned businesses, almost by definition, have a strong culture, because of the bonds that naturally exist between the owners. In reality, that's no more the case than at any other business -- as many families discover.

Successful athletes work every day to build a strong core. Family-run growth firms must do so, too -- only their core is their culture. Building a strong culture depends on articulating their core values in a meaningful way, so these principles don't end up as just a Boy Scout-like, generic list posted on a wall.

To do that, Tarascio turned to Mark Green, a Gazelles International certified coach, in 2012, after hearing at EO about Scaling Up, a system for growing a company that my firm, Gazelles developed.

Green immediately began working with Tarascio and his leadership team to define Ventura Air's core values so Tarascio could align the group around them. Tarascio had attempted this earlier on his own, but like most leaders, he'd struggled and the list of values actually did sit on a poster on the wall that nobody read. Following the process outlined in my recent book Scaling Up, Green showed him how to more accurately discover the company's true core values by looking at the qualities of the firm's ideal employees. They arrived at values such as "Constant, never-ending improvement" and "Speak up" -- something employees were hesitant to do a tight-knit family business. Doing this made it easier to lead employees and hold them accountable. "For the first time, we found it safe to give criticism, by pointing to the core values, instead of our own personal opinions," says Tarascio.

Identifying the company's core values made it possible for Tarascio and his leadership team to build a stronger culture. It also helped them to improve the company's hiring process, enabling them to design interview questions and assessments to test how candidates align with the company's core values.

They also looked at whether everyone on their existing team shared the company's core values. Some team members clearly weren't committed to never-ending improvement. "They're doing their job, but not making the company any better," Green pointed out. Ultimately, five people left voluntarily, which made room for Tarascio to hire new people who shared the company's core values. "Within a year or two, they were delivering a lot more value than if the person had stayed static," says Tarascio.

To help the team stay true to another core value -- "Fun" -- Tarascio also added a "Fun Committee." This group of four employees came up with inexpensive activities to strengthen bonds within the company. One day, when everyone showed up for work at 9:00 a.m., they arranged for a showing of Top Gun in the conference room. On Cinco de Mayo, the Fun Committee arranged to serve tacos in a Mexican-themed lunch.

At the same time, Green worked with Tarascio on improving Ventura Air's operating margins. In one part of the process, Tarascio identified the X factor that was critical to driving the company's growth in each key area of the business. Together, they also changed the metrics Ventura Air was using to measure success. "We were optimizing for the wrong numbers," says Tarascio.

When Green pointed out that Tarascio was getting lost in the details of too many areas of the business, Tarascio changed his focus to the most profitable part of the company -- the charter division. He arranged for his general managers lead the flight school and maintenance division, so he could work mainly on driving the charter division's growth. "Shifting contextually between the three models was killing me," says Tarascio.

In response to the changes, operating margins rose 33 percent from 2014 to 2015. "It's the biggest jump we've ever had," says Tarascio. The company also achieved a "massive" stretch goal of driving top line revenue by 28 percent from 2014 to 2015, one that that Tarascio set while working with Green. Initially, Tarascio thought he would need to add another airplane to achieve it, but changes in his pricing structure enabled him to do so without buying another.

The company began keeping people longer, too. Tarascio realized just how much of a draw the culture had become when a former flight instructor got a job with a commuter airline, the next logical career move for employees in that position. The former instructor often came in to hang out with the staff after that. "I really miss it here," the instructor told Tarascio. "I really feel like this is our family."

"Is there any better thing than having a former employee come back and say, 'Sometimes, I really wished I stayed'? asks Tarascio. "That delivers a really strong message to the rest of the staff."

The flight instructor sent an even stronger message when he recently left the commuter airline and came back to work at Ventura Air Services. Now that Ventura Air Services has the Scaling Up system in place and Ventura Air Services has become a fast-growing company, Tarascio is likely to find a lot more evangelists like this on his team.