Business Insight Zone

Yesterday Marketplace aired an interview with Andrew Taylor, the CEO of Enterprise Rent-A-Car. The CEO’s father, Jack Taylor, founded the company 50 years ago, and the father and son are the only two CEOs Enterprise has ever had.

Earlier this month, Enterprise completed its big acquisition of Vanguard Car Rental, which operates the Alamo and National rental chains. The move, which we discussed in the May edition of the Hoover’s Index, makes Enterprise the biggest company in the car rental business, and a major player in airport car rentals, where it traditionally hasn’t had much presence.

During the interview, Marketplace anchor Kai Ryssdal* asked how Enterprise plans to compete with top rivals Hertz and Avis. Taylor first said that Hertz and Avis are top-flight competitors that Enterprise takes very, very seriously. And then he said something that I think typifies the difference between the average publicly traded company and an ultra-stable family-owned company like his own: he said that his company had the strongest balance sheet in the industry.

This is a broad generalization, but in many cases that I’ve covered, successful family-run companies are prone to keep the company’s powder dry by minimizing debts on the corporate balance sheet. Typical publicly traded companies, by contrast, tend to use more leverage to fund operations, and private equity firms belong in their own category of being comfortable with debt. Each approach has its merits, but the frugality embodied in Taylor’s comment nicely encapsulates a lot of the stability-first thinking of family-held businesses.

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* Random thing I didn’t know before today: Before he got into radio, Kai Ryssdal flew jets off of the U.S.S. Theodore Roosevelt.