My son wants to bring his Dad and me out of retirement to help start a business. We could make a good team, as we’re all good at different things, but this is a big step. I’m concerned about making a go of it but I’m more concerned about this not stressing our family.
My husband and I feel this could be a long-term investment in our retirement. That is, of course, if we can make a profit with the business. The other thing we can help our son with is getting a loan to get started since he probably couldn’t get one on his own. There are lots of things to consider before taking this step. Any advice?
Of course I have advice, but maybe I should speak more honestly and say that I have an opinion on how to proceed…that way you can’t hold me accountable if things don’t go as planned! But, seriously, there are a number of pitfalls in general with family members going in to business together. And if you want to get a general idea of what they might be, watch a few episodes of Pawn Stars on the History Channel.
Not an episode of reality TV goes by on Pawn Stars that Rick, his father-“Old Man”, and son-“Big Hoss”, don’t get in to it over some seemingly trivial business dealings. It seems rather trivial to us couch potato viewers, but it can get really testy at times! Plenty of bleeped out curse words! I know what they say that all of reality TV is scripted, but I don’t think for a second that these guys aren’t getting in to it for real! Such are the dynamics of a family run business.
IF you decide to dive in to this family partnership here are some things to consider: Make it legally binding. If you and your husband are putting up the collateral for a business loan, yet your son is a partner, you will want to legally put in writing the worst case scenario of who holds the bankruptcy papers. If your son wants to be a partner, he either needs to put up cash or he will have to “pay his way” with “sweat equity” which means he puts in more time at work. What that time at work is worth could also be pre-determined in your written agreements.
Another big item you need to keep in mind when working with family is that you need to keep the personal stuff out of business. Easier said than done. This works best if you try and treat each other like co-workers and not family members during work hours. It also works best to limit the “shop talk” to work hours and not let it invade every Sunday dinner at the family home.
When you say you’re “all good at different things” it sounds like you’re on track with delegating the work duties to each of your strengths. Setting clear guidelines for who is responsible for what, will help diffuse any family tensions that may arise. Putting the job description of each family member in writing can take the assumed job responsibilities out of the equation. If there is finger pointing to be done, the job description will define in which direction the finger should be pointed.
There are perks to running a family business, one is to have fun with the generational divides. Don’t expect Grandpa to embrace Twitter or a smartphone. Expect him to want to type a memo, that he will hand deliver, on his old-school retro typewriter. It may be inefficient but oh…so…nostalgic!
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- What should the three of you discuss before embarking on this journey together?
- What items do you feel should be put in writing?
- How will you protect your retirement income?
- What are you willing to risk personally and financially for this business venture?
Listen to the Podcast for more on the Perks and Pitfalls of a Family Business.
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