Opinion: What not do do in a family business

James Jr. overpaid for the family business when he bought out his dad, James Sr. The company had been operating at a loss for years, and James Sr. put every last personal dollar into the business to keep it going. His “paid-in capital” totaled almost a $1 million. So, when he negotiated the sale with junior, he felt entitled to getting that money back out.

I understand, and I imagine you do too, that this represents an unfortunate situation. However, is it junior’s responsibility to make senior “whole” again?

The final sale price included the $1 million plus another $1 million for James Sr.’s retirement. Given the size of the business, and the lack of profitability, this company wasn’t really worth a small fraction of that. But here is the real kicker: James Sr. refused to step aside. Even after the sale, senior micromanaged everything, undermining junior’s authority. The worst part was that he thwarted every attempt to raise prices. That meant the additional payout requirement would become a ball and chain. It soon did, and the company went under.

From my perspective, the worst part was that James Jr. never wanted to be in the family business. He felt obligated. He loves his dad. But they haven’t spoken in years. Sigh.

I’ve got lots more. It seems that family members will do things to one another that they would never do to an employee or total stranger. The emotions and the expectations can get in the way and make an uncomfortable situation downright toxic.

What not to do?
Don’t enslave your children. Don’t get pulled underwater by a drowning man, even if he is your father. Don’t abandon your dreams for the sake of someone else’s.

What to do?
Allow me to tell you about my husband “Hotrod” and our son, Max. Max is 32 years old. When he was little, I wondered if he and Hotrod would go into the plumbing business together. Hotrod started bringing him to jobs when he was a baby in a Snugli carrier.

It’s extraordinary how well they get along. I don’t think they have ever had a cross word. Hotrod never pushed Max, and he was always happy to spend time with him, introduce him to people and involve him in all conversations. He never talked down to him.

Max experienced family business first-hand. He saw the benefits of being self-employed, but wasn’t turned on by the emergency nature of the plumbing-heating-cooling service world. He understood all too well the Christmastime “no heat” calls.

Max worked through school as a lifeguard, a call center operator and Blockbuster manager. His college years at the University of Utah provided a degree, subject knowledge and leadership opportunities as resident adviser and president of the Mighty Utah Student Section. Each step added to his education and skill set. We’ve always traveled, and Max became a thoughtful world citizen. He pursued relationships that began with his dad’s introductions and discovered opportunities to work in our fine industry – in Italy, Illinois, Colorado and Virginia.

Now, Hotrod works with Caleffi NA, an Italian manufacturing company. Max works with REHAU, a German company. Max calls his dad regularly, practically daily, to discuss a technical issue or fill him in on an interesting job. Or to report on the dogs. Or the latest art project.

What’s more to do?
Love each other and pursue your own passions.

In another man’s home, Max may have felt pressure to follow in his father’s footsteps. Instead, Max and Hotrod are just fine walking side by side. Max didn’t carry on the family business, yet he carries the family business everywhere he goes.

Ellen Rohr is an author and business consultant offering profit-building tips, trending business blogs and online workshops at EllenRohr.com. Her books include “Where Did the Money Go?” and “The Bare Bones Weekend Biz Plan.” She can be reached at ellen@ellenrohr.com.