FRIENDS AND FAMILY INVESTMENT

Father's Day: What It's Like to Launch a Business with Dad?

What happens when your co-founder is your father? Entrepreneurs explain the best and worst parts of running a family business--and how mom always gets called in to settle disputes.
LIKE FATHER, LIKE SON: Darn Tough founders Marc Cabot and Ric Cabot.
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In 1997, Steve Heinz decided to sell the business that he had founded 17 years earlier, EnergyCAP, which makes software for managing utility bills.

The buyer? Enron.

Five years later, after Enron had gone belly-up, Steve rescued the business from bankruptcy court.

"I picked up the pieces of my business, so to speak,” he says. At that point he was the only employee at the State College, Pennsylvania-based business--and he needed help.

By then, his three sons, Chris, Matthew, and John were all finishing up with college. None of them seemed all that interested in the business. But in 2003, Steve finally coaxed his son Chris to join as the company's first full-time sales staffer. He sold software from the guest bedroom of his house.

Six months later, when the company finally had enough money to rent an office, Steve asked Chris's twin brother, Matthew, to join the business. In 2005, the eldest Heinz finally convinced John, the youngest, to join the business. Today, there are 42 employees, and each Heinz runs his own department.

"The classic wisdom is 'Be careful with family businesses,'" says Steve. "Because you often hear that it goes poorly, and it can create some pain. But we've never had any of that at all. I've never had any concerns."

"I am secretly in therapy," Chris, his son, jokes.

EnergyCAP

The Heinz family.

About 90 percent of U.S. businesses are family-owned or -controlled, according to the Small Business Administration. Working with family members may be common, but it's hardly easy. Co-owning a business with a parent or child can create a relationship charged with emotion and create complex working dynamics.

Consider George Zoitas, the CEO of Westside Market, a family-run business in New York City that owns four Manhattan grocery stores. George recently took over the business from his father who founded the first store almost 45 years ago.

"I never really had a relationship with my father," says George. "I never saw him growing up because he worked so many hours. I met my father in the business. I never really knew my father before that."

His father, John Zoitas, emigrated to the United States from Greece in 1970. Seven years ago, shortly after George graduated from college, John asked his son to work with him full-time.

"I understood why I didn't see him while I was growing up," George says. "I now understand the work ethic it takes to do this job and how much time you need to be here. I used to hold it against him, but after realizing how it needed to be done, I felt like it wasn't his fault, at the end of the day, he was doing everything for his family."

Through a translator, John says he's proud of his son.

"Like any father, I wanted him to be something of higher status than I was," he says. "But when I saw George had an interest in the business, I wanted to make sure that he did it better than I did it."

WestsideMarket

The Zoitas men.

Of course, there's a difference between taking over an existing family business and starting an entirely new one with a parent. David Block and his father, Aaron, are developing a new product called Handable, an attachment for tablets and smartphones that makes them easier to hold with one hand. Aaron, 78, and David, 43, have been working on the product since 2011, and launched their website three months ago.

"It's a roller-coaster of emotions," says David. "We have opposing viewpoints on the way the business should be run. I always bend to his will, but there are incidents that pop up."

Often, familial co-founders will seek a neutral arbitrator: Mom.

"My mother always helps us settle disputes," says David.

George Zoitas, CEO of Westside Market, agrees.

"My mother is the best mitigator," he says. "My dad feels the same way. Whenever we have a disagreement and we're not seeing eye-to-eye, he vents to my mother, and I vent to my mother, and she compromises."

Entrepreneurs seem to agree that when business is good, it's easy to get along. But when business dries up, things can get complicated with parent or child.

When Ric Cabot joined his father Marc at Cabot Hosiery Mills, in Vermont, in the early 1990s, business was good. The company ran a healthy private label business, making socks for companies like The Gap and L.L. Bean.

But in the early 2000's, when clients began to outsource production overseas, business dried up.

"There were tensions," says Ric. "When you work with one of your parents, you're a lot closer on many things, but because you work with them, you’re probably not as close to them on other types of things. Little grudges develop, but like any relationship you try to settle on win-win."

In 2004, Ric decided the company needed to move away from the dying private label business and create its own brand. He launched Darn Tough, a premium outdoor performance sock. Today, Cabot Hosiery and Darn Tough employs close to 150 people in Northfield, Vermont. They grew 84 percent in 2011.

"I don't think there was as much competition at that point because he had a resignation of sort--not that he resigned--but he sort of let me take the reigns," Ric says.

Starting a business requires a high level of trust with a co-founder. So when Hanan Bard launched BRD Sport, a New Jersey start-up that manufactures an orthopedic sport brace, choosing his daughter, Mica, was the logical decision.

"You can't trust anyone like you trust your family," he says. "Who is going to work harder for you than someone that loves you?"

BRD

Mica Usdan and Hannan Bard.

For better or worse, entrepreneurs agree that running a business with a family member gives them most an opportunity most people don't get past childhood: time with each other. A lot of it.

"As we grow older with our father, we get to spend a lot of time with him in the prime of our lives," says Chris Heinz, who is now a director of marketing at EnergyCAP. "Time is precious. We get to travel together; we get to work side by side.  It's been very cool to spend that kind of time together."

Last updated: Jun 15, 2012




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