He never finished paying. Whatever the underlying issues, he and his mother had no way of confronting them. They tried avoidance; for a year and a half they didn't talk. Estelle came back to work for the three years before she died. "There was a little bit of patching up, but not much," says Sandy sadly. For Jeffrey, the family nearly disintegrated -- relations with his sister are "very, very strained," he says -- although he has had plenty of work to distract him. Great Expectations has become a $46-million business, with franchised centers all over the country. "We got on each other's nerves," says Jeffrey, 40, who dedicated a room to his mother in his new offices. "She spent so much time arguing about small things that she throttled its growth. Or I blamed her. We were never the same."
Is any start-up money worth suffering that irreparable a loss?
You decide. Make up your mind before you conclude that banks or venture capitalists or private savings won't get you off the ground. Weigh the possibilities -- against the monetary and emotional costs -- then recheck your projections, grab your business plan, and head where you think the loans come cheapest. Maybe it's someplace where the collateral is higher than you'd like or the interest rate seems downright abusive. For your sake, it ought to be a deal in which you can truly assess the risks; remember, events rarely proceed as planned.
If impatience wins out, you may find yourself standing on your parents' doorstep. They will give you the money, if they can. You might not have to sign anything, but the casual contract between you and them will include unspoken emotional clauses. What are they? You won't know, exactly, until you have broken them. When that happens, your family -- loaded down by its own particular past -- will reveal its true fragility. It may collapse on your company. It may shatter some valuable relationships.
Only then -- and every Christmas or Thanksgiving or birthday thereafter -- will the true advantage of a bank or a venture capitalist or an informal investor become apparent. With nonfamily backing, whatever the financial cost, the business gets the chance it deserves. And you get the opportunity to prove yourself as an entrepreneur. It still won't be easy; start-ups never are. But if it doesn't work out -- if you should fail or give up -- all won't be lost.
You can always go home.
IF YOU MUST . . .
One family's recipe for happy parental lending
Any relative who approaches Bruce McGrath for a loan might suddenly develop a new fondness for the local banker. "He's very, very vigilant about getting everything down on paper," says daughter Janet McGrath. "He doesn't just say, Yeah, great. He wants to see all the figures, and he lets you know you are definitely working within a budget."
Bruce, who owns a $25-million Pontiac dealership in Cedar Rapids, Iowa, invested in his 29-year-old daughter's retail business last year. He has also worked out deals with his son, son-in-law, and brother. "I'm certainly more liberal than a bank," claims Bruce, 52, "but I do have strict parameters as to how I will consider investments."
Strict and very thorough. Ask him for a loan, and Bruce McGrath will send you off to be evaluated by a psychologist, who will report back on your aptitude for business. Then he wants to see some convincing paperwork: a business plan, cash-flow projections, monthly budgets. "I handle it like an investment, not in a fraternal way," he says. "It's hard to be objective, but in a family, communication can get difficult."
He speaks from sad experience. Back in 1975 he borrowed $140,000 from his father to buy the dealership from him. Five years later, when he went to pay him back, the business was booming, and his father felt that the deal was no longer fair. The elder McGrath died shortly thereafter, leaving "a lot of these things never resolved," according to Bruce. Other family members carried some resentments. "It wasn't open warfare," says Bruce. "It was an issue lying beneath the surface, and it kept relationships from being as good as they could be." Finally, two years ago he hired a psychologist to conduct family meetings and help sort out the emotional issues. "There was more resentment and a lot more concern and misunderstanding about these arrangements than I thought," he says. "At the bank, a deal's a deal. But even if you pay a family loan back exactly as agreed upon, side issues come up."
To prevent that sort of emotional ambush -- "I felt I had been mistreated by my brothers and sisters," says Bruce -- he set up a formal system for evaluating business propositions. In addition to providing half the funding for his daughter's home-accessories and jewelry store, he has put his son-in-law in two businesses -- "one went kaput" -- and his brother in a car dealership. Bruce has also worked out an arrangement so that one of his own sons, Michael, can buy him out. "We have a written agreement, and there are no personalities involved," says Bruce, who has three other children still in school. "I'd love to put them all in business," he says. "I'm ready when they are. And they know exactly what they have to do."
