I grew up in a family business that I absolutely love. It's a butcher shop, and I'm the fourth generation. For many years, I tried to work with my dad, but we're both strong willed, and I decided to follow my own path and went for my M.B.A. Today, I work for a large financial institution. About four years ago, I moved back to Detroit to be closer to my family. I have been able to get more hands-on with Dad's business, and now he wants me to buy it. And I want to buy it. The problem: I make a nice six-figure income that I can't afford to give up. I also like working from home, as I do now. My dream would be to keep my job but buy out my parents so they'd have some money to retire on. I'd be in charge, but I'd let them continue to work part time. (My mom still runs the office.) The problem is, I have no idea how to value the business, pay for it, expand it, and run it from home.
--Jeff Evans, Marketing and Operations
Richmond Meat Packers, Richmond, Michigan
You always face the challenge of keeping your emotions from getting in the way of making sound business decisions. Those emotions are especially strong when you're dealing with family issues. I was worried that Jeff Evans was about to make a bad decision based on his emotional attachment to a business that has been in his family for four generations.
My specific concern had to do with Jeff's idea of trying to run the family business on a part-time basis from his home while keeping his full-time job as an account executive for a major financial company. In my experience, it almost never works to run a business like this one--a multigenerational mom-and-pop that relies on a personal touch--on a part-time basis. If you're not on the scene full time, seeing what's going on as it happens, you miss things that you should be factoring into your decision making. As a result, you wind up making mistakes that you could have avoided.
That said, Jeff was clear that the family business was his real love and that he would devote himself to it exclusively if he could afford to, something he cannot do at the moment. So the question is, Can he build the business to a point at which it is generating enough cash to employ him full time? I suggested that Jeff and his parents hire someone to work full time and execute a growth strategy they would come up with together. If it works, he may eventually be able to fulfill his dream. If not, they can at least get the business in shape to be sold, which would achieve his goal of making it possible for his parents to retire.