Family Business Woes
Hey everyone, I could use some guidance about the situation at my family business. Using a throwaway + some details are changed to maintain anonymity. Apologies for the rambling, this is my first time putting these thoughts to paper.
My dad owns three small businesses (combined EBITDA of low/mid 7 figures) that are separate but tangentially related. Recently, my two older brothers have taken over two of them as my dad begins transitioning to retirement. I'm trying to decide if I should join them, and in what manner.
For background, I'm a first year associate at a MM shop with a passion for all things business/finance. I'm ambitious, hard-working, and have always planned to go out on my own at some point. I have two twin brothers (the "twins") who are about 5 years older than me in their early 30's who don't quite share those same attributes. Now, I love the twins greatly and would consider myself best friends with them, but they simply don't have the same goals and visions as I do. They are both very smart and come from good, yet non-business/finance backgrounds, but I'm skeptical of their acumen. Not that this is a prerequisite for success, but they would scratch their head if asked what their cash conversion cycle looks like, can't read financial statements past revenue, etc etc. Their work ethic is lacking; the moment they log their 40 hours, the moment that clock strikes 5pm, they're on the road (if they didn't already leave to beat rush hour). They view the family business as an easy, stable job, where they can coast and take refuge from the typical corporate world (I don't necessarily blame them for this-- they are both married and have three young kids among them + they've never been in an environment where they actually had to grind). On the other hand, I see it as an immense opportunity to build something great, but at the cost of painstaking work. I have a clear vision of improvement for the three businesses, but my plan would involve the twins rolling up their sleeves, working more hours, studying new things.
Problem #1 is that I don't necessarily want to impose my view on them. If I was given latitude to build my own team, I would recruit those with the skills to get the job done. In this case, there is a pre-built team that I have to be amenable to since they're family; I can't exactly command them to do my bidding or mold them into my ideal. Which brings us to problem #2: while we are friends/family, there's always the dynamic of me being the little bro, the butt of the jokes. Without a decree saying otherwise, I'm the de facto bottom of the totem pole; they have more life experience, more work experience, and will be less inclined to follow my lead if it would be difficult for them. So essentially, I only want to join the family business if I can motivate the twins to follow my lead, and if the playing field can be equalized. I don't want to just work at a dinky small business the rest of my life with no growth or improvement ambitions, especially if it means making a fraction of what I am making now (which would be the case for salary, but one that I'm comfortable with in the long run). Further, there is an element of time. The longer I wait to make the jump, the more entrenched the twins will become in their ways, the less impact I can have. Plus, I straight up feel a little left out: the twins are doing what I want to do, but I feel they are squandering the opportunity and not fully taking advantage of it. I realize this reeks of jealousy, resentment, and arrogance; that's my problem and I fully concede so. Making the jump means having to overcome my mental obstacles and somehow get the twins to agree to my plans. Not making the jump means watching the twins do what I want to be doing, but with the feeling that I could be doing it better.
I am trying to balance the love and respect that I have for my family with my own personal dreams and desires, and I simply don't know the best way to proceed.
It sounds like autonomy and control are critical to you enjoying the process of growing the family business. If the twins are adamant about being involved and feeling like they too should hold equal power in decision making, this won't be very fun or worthwhile for you. I'm of a similar mindset in that 99% of the benefits of entrepreneurship or leading a business is being able to define a mission and design a plan to accomplish it yourself.
Unless you think you can buy them out or otherwise ensure your word is final (and even then I'd be concerned about friction or tension), I would pass. Pick up a small stake for contributing in a board-like capacity so that you can still feel "in the game" but it sounds like you shouldn't stake your career on this bet based on your post.
I don’t think you should join at this point - it may limit your growth.
I appreciate the thoughts from both of you. Anyone else, feel free to chime in further.
Separate the fact that they're family and think of them like any other employer. Would you want to work for someone who doesn't share your vision and/or risk appetite? Say you do take the plunge and try to bring about change and the reaction is "status quo is fine". Would you be satisfied with having no impact?
You could try to make it work. Soft touch your ideas with the twins, approaching it like a client pitch. Those are more about the egos than the numbers, you know this already. They're family, you know what makes them tick, what motivates them and likely what could get them to say yes. Use that to your advantage. Worst case, they say no, you move on.
The wildcard is your old man, the "Chairman" to the twins "C-suite". You could try to get him to buy in but it's a tricky act balancing all those egos.
Would this only work for you if you lead and they follow? Would you be satisfied letting them lead but implementing the things you want to create more value?
I think it's a super interesting opportunity and sounds like this is what you want to do.
How is a low to mid 7 figures EBITDA company a small business?
He said they are three separate companies. You certainly wouldn't call them large.
read some books on manipulation, seduction, and sales. So your persuading skills are up to mark
I don't mean this in an antagonistic way, but if you're so different from them, then why do you want to be in business with them? I mean, I get it, family business and it's your father's legacy and all that, but do you have to do it? You had plans to go out on your own anyway, so just do that. Besides, you're just getting started in your career, its beneficial for you to prove yourself on your own first anyways.
Finally, you sound like a smart guy and your brothers sound like a headache (at least to me as a third-person). So it may be a scenario where "the juice isn't worth the squeeze" on this to work with them to begin with. You do you boo! :)
Good luck!
But you don't really want to build something great. You want to take something already built in a new direction. If your vision is so different than the current business that it requires an entire paradigm shift on the part of the owners, then it's just a different business altogether that you're launching on the back of existing cash flow.
Moreover, you don't really know that your ideas are even all that good/workable. Building a successful business has nothing to do with being a finance genius. Your father built a successful company. If your brothers are keeping the ball rolling and creating an environment that values stability and employee retention (which could easily be the case. reading between the lines of their attitude towards the business/work in general) then that isn't bad. It's just different.
You've just go a lot of conflicting motivations and desires in here. You complain, rightly, about the challenges of being the youngest and imposing some sort of parity on your elder siblings... but also want them to follow your lead, which is just flipping the script and asking them to be junior partners. You want to build something great, but you're not willing to take the risk to do it yourself - you want others to buy into your vision with essentially no justification beyond the fact that you understand what a "cash conversion cycle" is.
Maybe it's worth asking your siblings what exactly their vision is. Maybe they have one that you don't; you don't seem to have a great grasp on what they do want, just mild criticism of their work habits. Perhaps if you present them (and your father as the true power here) with an intelligent and well-reasoned argument for your vision, they'll give you the power to implement it.
You're just asking for a lot of respect and power when you haven't done anything to demonstrate you deserve it or have earned it. At the very least, your brothers have shown that they're capable of managing the business competently, even if they're not building the next Amazon. You seem to want the license to take a huge risk and do something radical, and it doesn't sound like you've put forth an argument for why that should be except "I know finance and you don't"
One of my uncles was in nearly this exact situation. Below are notes on how he handled it, and how it worked out for him.
He was the youngest in the family. His family had a conglomorate of several somewhat related (vertically integrated) businesses that were doing ok (I don't know the exact financial figures, but probably a financial profile not too far from what you outlined). He was smart and hard working and was born under some lucky stars - he went to school with the right people. Not a prestigious school, but had some similarly ambitious friends/classmates who ended up in senior roles and eventually became very lucrative clients.
He built the business through incredibly hard work as well as through his connections. He is now the weathiest family member I know. If you read news articles in the national papers of his country, he gets mentioned from time to time (for good things and bad things). It was HIS work that built the empire. It was his blood, sweat, tears (and connections) that helped him take the business to this level.
Problems: to this day, his family still thinks it's the "family business". It took a long time, and a LOT of fighting (some of it because he was seen as "the youngest"), but eventually the family recognized him as "the Shit". The TOP dog. The big man. But there is incredible (I would argue, unearned) sense of entitlement from the other family members. Imagine he founded McDonalds and his brothers and sisters were his sole supplier of hamburger buns and beef patties (and I would argue, he ran those businesses too to some degree because he needed it to work a certain way to be properly vertically integrated). Sure "their" part of the businesses took off, but you'd be a fool to think it was because it was soley their "hard work".
The next generation is also a bit weird. They are all smart, ambitious and well educated (they could afford the best of everything), but they simply can't match his ambition (and luck when it came to relationships). I've never believed in the rule that wealth doesn't last more than three generations more than I have with this situation. They are also fighting for their "piece of land" as it relates to the empire. I swear it makes for great TV, but I would hate to live in it (despite the relatively vast weath to be shared).
Also, the wealth attracts vultures, including from within the family. He is a nice guy and has employed a lot of family members that do next to nothing. Working with family sucks. There have been situtations where he's had to fire family members (because he actually need them to work in their roles) and then have dinner with them that same evening.
There is a lot of drama.
EDIT: There are a lot of pros and cons to this model. Lots of starting advantages and disadvantages. Either way, I genuinely wish you luck!
That three generations saying is a myth, not a rule lol. More expansive studies have shown that the three generations study was incredibly flawed.
Is 'three generations' a study? I thought it was an old Chinese saying?
What's keeping you from just buying a small business and doing your own thing? If you don't want the headaches of doing business with family but want to be a business owner, that's probably a better way to go.
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