I am so delighted that my blog is allowing many of you to reach out and use me as a sounding board for many of your ideas you’ve been wondering about related to business and strategy! A gentleman recently reached out to discuss his family business, which is prompting today’s post. It is my honor to lend an ear and also provide valuable insight to your inquiries.
Let me share my experience –
Business in general is tough…. It just is –
But when you involve family and/or friends in business… that can take things to another level.
It’s like a marriage… very intimate and a LOT of compromise and work!
It gets even further complicated based on the hierarchy/corporate structure. Are the family members/friends in the correct positions i.e. skill, experience, commitment?
Or did they just assign themselves prestigious leadership titles with nothing tangible to warrant the formal assignment of responsibility?
Is there any type of jealousy or dissension between family members/friends as to who is or isn’t ‘pulling their weight’ or wether they are honoring and acting in the best interest of the organization?
The list goes on and on… Im my case, during the early years, the shares within my organization were split 10%(me) 20% (silent partner/investor) 70% (my mother) and in regards to my role…
I’m not even sure I had an official title LOL –
And trust me when I tell you #frazzled #hangingonbytheseatofmypants or #hotmessexpress would have been appropriate.
Over the years, as the company continued to grow, instead of taking any type of profit distribution, I would reinvest my profit to acquire more shares. By year eight I was holding 30%.
Please note: It is very important in relation to my personal character and integrity to communicate, that even though I was an intricate part in growing the business, there was no inflated salary/bonus bestowed upon me that wasn’t earned nor were company shares handed to me just because I was family.
By the time I took full ownership of the business, I had to buy the remaining 70% at fair market value on a three year payment plan.
I mention this because in recent conversations with those who are involved in family or friend business partnerships…. there is an undertone of entitlement and unreasonable expectations… at least from my perspective – so take that for what it’s worth (wink).
Don’t misunderstand me – I applaud those who are lucky enough to be blessed in a family business who are given security and leniency without having actually earned it.
And on the flip side, many family businesses do not reach a level of profitability that honors all of the members fairly. More common than not, there are many cases where a family member dedicates valuable time and loyalty to the family business and walks away many years later with great regret and lost opportunity.
In my current partnership, I am given a great deal of support and leniency, which I assure you is NOT taken for granted, because it wasn’t that long ago that I wasn’t able to take a pay check for three months out of the year to ensure the organization’s sustainability.
The advice I give most who are considering entering into a family/friend business arrangement –
DO NOT romanticize it!
PUT all of the pros and cons on a spreadsheet and have the difficult conversations about worst case scenarios which should include an exit strategy that is formalized.
Talk about a buzz kill…. My friends and family actually refer to me as the ‘dream crusher’ – lovingly I’m sure LOL
As a matter of fact, I was recently consulting with a young woman in our home and when she left my husband, who had heard bits and pieces, said, ‘Great Amber, you just crushed all of her dreams… No way will she move forward now – you didn’t even give her a chance.’ I said ‘I was honest! Did you want me to lie to her? Hope for the best? The best RARELY happens! I’m not going to have that on my conscience. If she chooses to move forward after I gave her the list of impossibles… then she does so at her own risk – No Surprises – Intentional With Purpose – Level Headed.’
Remember… this advice comes from a risk manager/strategist lens and can be viewed as excessive or insensitive.
Look – I’m not a life coach or a motivational speaker… and I don’t get paid to guess –
Don’t get me wrong – I love to see others succeed so I will stay up all night… run every different scenario I can to solve a problem or operate a business at its optimum efficiency thinking all the way outside of the box! I love to WIN as much as the next person and if I can figure out a viable solution… I will do so passionately with everything I’ve got!
And for those of you who HAVE gone through a business breakup or tragedy or better yet…. a divorce/custody battle (which is very similar in nature)….. Can I get an AMEN!
I’m sure you will agree that had you done the ‘work’ before entering into the relationship…. you would have been more aware, more grounded, and more prepared for when the rug got pulled out from under you.
It’s not being negative… It’s actually being proactive and honoring all parties by being open, honest, and vulnerable while the relationship is on the best of terms.
And at the end of the day, whether in a personal or business relationship… the goal is to enter and exit with the upmost humility and personal integrity all while honoring and being true to yourself.