Family Business

Discussion in 'Growing and Managing a Business' started by chang, Oct 25, 2011.

  1. chang

    chang
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    Hi there, this is my first post, so thank you for your comments...

    My family and I run a business together (my step father, step brother and I), and I am having a few difficulties.
    The business is established however it hasn't made much to any money or the past 3 years. We are both new to business so we both agreed to buy out my step father over a period of time so we can learn and grow the business. I have shown some real drive to buy this business by putting in roughly 55-60 hours a week for the past 3 years with not many holidays. I have cut cost by nearly 50k each year and I really watch my side of the business. I try to do everything i can to generate as much sales and profit as possible. Im absolutely obsessed with the business.

    Unfortunately my brother has not done the same. To me and many others, he shows lack of initiative and dedication. however his father does not agree. I have discussed my issues and concerns about him and the business in many meetings. I do see a change for a short while (1 week) however it goes right back to the same.
    Im getting extremely frustrated and it still is possible to walk away from the business.
    I have put a lot into this business and really do love it. ultimately I do not wish to leave, however i do not want to be held back or carry him or create a resentment in the fam.
    My step father is extremely tired and cannot handle running the day to day.
    He has approx 1.5 million in debt to the business which we would be taking. The business has taken a steady slide over the past 2 years unfortunately. Any ideas? thanks very much, I appreciate your time and input!
     
  2. roysalmon

    roysalmon
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    Hi Chang,

    What dose your company do or make! Family business can often experience inter relationship problems between members
    which sadly create tension and effect the success of the business. The following suggestions may help:
    1. Offer to buy your brother out, say over 5 years at an agreed monthly sum of money plus a guarantee % of any profits
    made over the 5 years.
    2. Suggest to your stepfather that he retires from the day to day business and in return will pay off the debt over a period of
    time from future profits.
    3. Then consider finding a partner who would be interested in working with you at terms that suit all parties, ie salary, plus
    share profits etc.

    It will not be easy for you, but if you can carry it off you will at last see the fruits of your labour and may I also suggest
    reconsider developing your products and services to meet current trading conditions.

    I wish you the very best of luck.

    Roy Salmon
    Design and Marketing Consultant from the UK
     
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  3. chang

    chang
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    Thank you very much for the post roy!

    I have offered some of the above, however he does not wish to be bought out.
    I suppose why would he? after all it is nearly a free salary!
    we run a family bar in texas.
    Fairly confusing, I am definitely regretting business with family :)

    thanks again.
     
  4. LFinkle

    LFinkle
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    The challenges you face are pretty typical of a family business. Not everyone works as hard, wants the same things or is willing to do what it takes. $1.5M in debt is a lot to take over but I don't know your revenues so maybe this isn't much. There's no one right solution to this. You have to talk to your brother and determine his needs, values, what he's willing to do and get a commitment from him. Ultimately if he isn't willing to do the work or put in the effort you may need to buy it yourself or step away. I wrote a book on partnerships and family businesses. The title is Finding the Fork in the Road and you can purchase from all major retailers. And you can download a chapter for free at the website of the same name.
     
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  5. Arron93

    Arron93
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    You may find a tough time getting a loan from financial institutions with poor credit.Either downscale your plans and amount or wait until the absolute specialist help you out...
     
  6. chang

    chang
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    1.2 roughly in sales per year!
     
  7. augazebo

    augazebo
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    augazebo

    Being engaged with family in a business model provides great opportunities for both conflict and shared success.

    details on augazebo.com
     
  8. DaveB

    DaveB
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    Hi Chang,

    Interesting dilemma and you sound like a very smart person. 1.5 million of debt sounds like an extremely high number for a business that only does 1.2 million in sales per year. What is the net profit per year after expenses? Or is it running at a loss? Are you paid well for your work? I would be hesitant to take on a business with this much debt that you will not have complete control over and will essentially be forced to partner with someone that is not as talented or hard working as you. If the business is slowly declining as well you could probably dedicate your time, energy and money into something more promising. You will find in many business settings and not just ones that involve family that there will always be lazy people who do not pull their own weight and even make more money then you and have more power while not having half the talent or work ethic. This happens in jobs all the time and is pretty common actually. Mostly it is just about weighing the pros and cons for you personally. Are you doing something you love (it sounds like it)? Do you make enough money to support yourself /lifestyle? Is there any upside for you personally? These types of questions have very little to do with whatever your brother is doing on a daily basis.

    What part of Texas are you in?
     
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  9. chang

    chang
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    Thank you very much for your post Dave,
    The business has not taken a profit for almost the entire time it has been open. It has struggled since the opening, however things are looking up slightly... We finally made almost 30, 000 net this year.
    I am not paid very well for my work, around 45, 000 per year. Those are all very interesting questions that I have to ask myself. You are right, I guess I really am going to have to figure out what's right for me. I just would hate myself for missing out on a good opportunity. Change sure is scary! haha :)
    As I am still young, I suppose there is many different paths I can still choose.
    Any more thoughts?
    i really appreciate your incite, and wisdom!
     
  10. digitalendurance

    digitalendurance
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    online jobs work from home

    there is gud option for family business is...bcz

    Making money online from home business/jobs can change your life. Learn how to make money and earn extra income online fast and work from home jobs dreams with proof that they have actually worked.
     
  11. td2011

    td2011
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    Hello Chang. Anyone who has been in business with friends or family will probably have experienced what you are going through now, as have I, though on a much smaller scale- thankfully. You have to come to some agreement with your brother and stepfather about the situation, something that is fair and reflects the amount of work you put into the business. Whatever you decide may not suit everyone but from what you've told us the business can't go on as it has been for the past few years without improvement. I'm sure you can come to some agreement soon
     
  12. marksanchez

    marksanchez
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    A good alternative to a traditional business loan would be to get a business cash advance against future credit card sales. You can usually get 120% of your average monthly sales and the loan is unsecured, very easy to be approved for, and will fund in just a few days.

    Mark Sanchez
    www.AmericanBusinessFinancing.com
     

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