Category Archives: Family Business

Can An Entrepreneur Have Work-Life Balance and be Successful?

Family Business

Despite the common assumption that successful entrepreneurs have to be completely obsessed with their work, I think work-life balance is possible, even for people starting new businesses.

Things that matter you can control

I don’t like the myth that the real entrepreneurs ignore everything else. In fact I know several very well. They work hard, but also get back to family for dinner time and bed time for the kids, get to parent-teacher conferences, watch some if not all the kids’ soccer games, help with homework, and take the occasional family vacations.

Here are some ways they do it:

  • It takes being mindful of priorities. You do the business to make your life better, not give your life to make the business better. The kids will only be little for a very small time, and if you miss that, you can’t make it up. Relationships matter to most of us. It’s easier to build a business, or find a new job, than to find a new spouse.
  • One insight required is that in a startup there is always more to do. Work could be 24 hours a day, 7 days a week, and there will still be more to do. So you stay aware of what’s most important.
  • Also, there will always be crunch times, a few days or weeks, when all bets are off, and the entrepreneur has to be obsessed. The balanced entrepreneur separates the crunch times from daily life. And the good  relationships understand and let the entrepreneur alone for those crunch times.
  • Most businesses are done in teams. A balanced entrepreneur builds a team, delegates, and trusts.
  • The people involved with the entrepreneur can help with this. Book vacations in advance, be aware of crunch times, but help with reminders about the kids’ events, school events, etc. Insist on family time.
  • Many successful entrepreneurs start early in the morning, work all day, get home for family-spouse-significant other time, then work some more later in the evening.
  • It takes honesty and self awareness to separate loving the work – most entrepreneurs do – and obsession from just having excuses to not bother with the rest of life. There’s a temptation to use “I have to work” as an excuse for unconscious selfishness.
  • There’s an argument to be made that people – all people, including entrepreneurs – are more productive when they split the day between work and life.

And I do know people who deal with this well, some of whom are very well-known in startup circles. But I won’t mention names because this is very personal.

For the record, this comes up because of this question in Quora, and some of the answers to it.

(Image: Not mine; I picked it up from a Facebook post of a year ago. I apologize to whoever drew it originally. If I knew, I would give credit.)

Don’t Give Away Ownership As If it Were Just Credit. Please.

Family Business, Starting a Business, , , ,

Please, entrepreneurs, this is important. Please don’t give away ownership in your startup, ever, except to partners who offer permanent help and value to the business, and will be there forever. That’s team members working the business, investors, or strategic partners with long-term commitments you can’t live without. Separate ownership, which is critical, and should never be given away easily; from credit and kind words, which are easy to give away.  

I’ve seen this so many times. People give percentages away to their lawyers, their graphic artists, their friends, and their relatives, but for no good reason. Then what happens is if the business makes it a year or two into actual business, suddenly those once-naive founders realize they are doing business with partners, who own part of their company, who don’t work, don’t care, criticize, and drag the decision-making processes. Pay the fees. Don’t save starting costs by giving the business away. 

Giving a piece of your new business isn’t liking buying a round of drinks at a table, but sometimes people treat that as if it were. But the truth is that you only have 100 percentage points to give away. The best ownership structure is 100 percent you. If however you need resources, key people and investment, then you need those percentage points to trade them for absolutely critical long-term relationships, or money. Not to make your cousin happy. Not to save on attorney fees. 

I recently dealt with an entrepreneur who was grateful for a ton of help, including written content, received from a good friend. He was trying to figure out how much of the company to give that friend as a reward. But the friend wasn’t going to be involved in the future, had taken another job, and wasn’t even asking. 

Don’t give her a piece of your business, I said. Pay her fairly. And if you can’t afford to pay her now, write up a bonus or a percent of sales that you’ll give later if you make the sales. Everybody wins. And you own your whole company. You don’t give away a piece of it in gratitude for somebody who won’t be a permanent part of it. He took my advice and gave her money now and a promise of money later, but not ownership. Both sides of that were delighted with that arrangement. 

What brings this to mind is this question I received over the weekend in my ask-me form on my timberry.com website: 

I’m 19. I have been avidly working through ideas for an amazing product. I’ve gone through lots and I eventually stumbled upon one that my mom loves so much that she wants to be a part of my business. Great news, but my issue now is that I’m willing to list my mom as a founder and now she wants me to add my stepfather as a founder as well. I feel like people are fishing for credit and titles that they have not yet earned. I’m not willing to appease anyone for the sake of it. How can I build a successful business alongside my family? 

Kid, you’ve got this one right and your mom and stepdad have it wrong. Read the post here. Family or not, ownership in your business is about actual contributions to your business. You say you’re “willing to list” your mom as a founder. But this isn’t like the acknowledgements at the beginning of a book; this is ownership in the business. List, sure; stocks and shares, no. 

Titles and credits are nice but ownership should be reserved for people who are going to actively contribute either money or long-term help. List them as advisors and give them credit on your website but give them ownership in proportion to the work, contribution, or money. This is business.  

(Image: bigstockphoto.com)

7 Questions to Ask Before Doing Business With Your Spouse

Family Business, Starting a Business, ,

I often say “choose an investor like you would choose a spouse.” Sometimes I say “choose a partner like you would choose a spouse.” But what if you already have the spouse, and you’re looking to start a business together? What do you choose? 

Before you start, it’s a yes or no question, I think. Do we start a business together or not? 

I recently received an email from Dennis Seaman and Quincy Yu who are married to each other and, presumably, to their business, which they is SeaYu Enterprises, whose main product is Clean+Green Pet Stain and Odor Remover. They call that “copreneurs” and “marriedpreneurs.” They’ve been doing it for 10 years now, they said in their email. And they’re obviously happy with the results. 

They offered me this list of seven questions to ask before starting a business as a couple: 

#1 Do your skill sets compliment each other – or compete with each other?
#2 Do you have similar professional AND personal goals?
#3 Is your relationship equipped to handle the stress of running a business together?
#4 Do you know the “work” version of your spouse?
#5 Are you both equally passionate about the business?
#6 If planning to work from home, can you set aside a separate office space?
#7 Do you trust and respect each others’ skills?

Those are powerful questions. But from my point of view, having had 30+ years in business with my wife, and 10+ years watching two of my grown-up children doing business with their spouses, that the right (or wrong) answers may not be as obvious as you think. Take question #5 there, for example, or question #2: Do you think a yes answer is required? I don’t.  And with question #3, I’m afraid that until you’re right up to your neck in the business you have no idea what the stress level will be, or whether or not you can handle it. 

But I will say this: This is definitely a good list of questions to answer. And do it out loud, please, and then discuss it. It’s never going to be this simple after you start. 

Some Suggestions for Family Business

Family Business, Weblogs

I’ve done business with my wife, daughter, son-in-law, and various mixtures of those. Of course the classic advice on this is not to mix business with family.

But people do. I read somewhere that 62 percent of the gross national product of the Western world is produced by family businesses.

Furthermore, I don’t believe (much) in general rules or best practices.

But here are some suggestions that might help you manage the mix between family and business relationships.

  1. Beware of the crossover. The cause of most family business problems is the crossover between different relationships. You don’t mix boss and subordinate relationships with parent-child or siblings or husband-wife. People who are successful working with family separate the roles so you don’t get into family behavior when you’re talking about business. You have business discussions and personal life, and never the twain shall meet. That’s really hard to do, but it’s also vital.
  2. Use physical location to help. Make a rule not to talk about business at home and not to talk about home and kids and relationship problems at the place of business.
  3. Use physical presence to help. Don’t talk about business in front of the kids. Or the parents.
  4. Recognize communication triggers. Often what started as business discussion is suddenly husband-wife or sibling-sibling or parent-child, stop. Call time out. Have a signal. Adopt a safe word. We spend years in patterned habitual behavior based on the family relationship so stopping it for business is hard. We have to work on it.
  5. Don’t forget to acknowledge the advantages of family business. You are working with people you know and trust who care about the same things you do. You share the problems. You share the rewards.
  6. Don’t pretend it’s all arms length and objective. Family factors influence decisions. It’s naive and distracting to pretend they don’t. Try to be aware of how and when they do and manage the long-term objectives accordingly.
  7. Never stop learning.

My wife and I didn’t intend to build a family business. I was on my own consulting and building products and she was (still is) my advisor and confidante. We grew older and our children grew up. People who were once preteens spending Saturday mornings putting sticky labels on plastic software disks grew up and became interested in the business. We never pushed them to, but never tried to avoid it either.

We did employ a family business counselor for several years. Her name was Bonnie Brown Hartley and she was good for us. We met once a month for a session she ran. At one point that was me and my wife and a son, and later our son left but we had two daughters and their husbands involved. The family meetings were a useful format.

The best thing Bonnie did for us was insist on a written family business code of conduct. I won’t pretend we never broke it, but it was a good idea.

(image: bigstockphoto.com)

Reflection: 10 Lessons Learned in 22 Years of Successful Bootstrapping

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(I posted this about two years ago on Small Business Trends. I’m reposting it here today because this is a good time of year for this kind of reflection. And maybe also for not writing a new post. Tim )

Last week a group of students interviewed me, as part of a class project, looking for secrets and keys to success. They were asking me because after 22 years of bootstrapping, my wife Vange and I own a business that has 45 employees now, multimillion dollar sales, market leadership in its segment, no outside investors, and no debt. And a second generation is running it now.

Frankly, during that interview I felt bad for not having better answers. Like the classic cobbler’s children example, I analyze lots of other businesses, but not so much my own. As I stumbled through my answers, most of what I was saying sounded trite and self serving, like “giving value to customers” and “treating employees fairly,” things that everybody always says.

I wasn’t happy with platitudes and generalizations, so I went home that day and talked to Vange about it. Together, we came up with these 10 lessons.

And it’s important to us that we’re not saying our way is the right way to do anything in business; all businesses are unique, and what we did might not apply to anybody else. But it worked for us.

1. We made lots of mistakes.

Not that we liked it. At one point, about midway through this journey, Vange looked at me and said: “I’m sick of learning by experience. Let’s just do things right.” And we tried, but we still made lots of mistakes. We’d fuss about them, analyze them, label them and categorize them and save them somewhere to be referred to as necessary. You put them away where you can find them in your mind when you need them again.

2. We built it around ourselves.

Our business was and is a reflection of us, what we like to do, what we do well. It didn’t come off of a list of hot businesses.

3. We offered something other people wanted …

… and in many cases needed, even more than wanted. You don’t just follow your passion unless your passion produces something other people will pay for. In our case it was business planning software.

4. We planned.

We kept a business plan alive and at our fingertips, never finishing it, often changing it, never forgetting it.

5. We spent our own money. We never spent money we didn’t have.

We hate debt. We never got into debt on purpose, and we didn’t go looking for other people’s money until we didn’t need it (in 2000 we took in a minority investment from Silicon Valley venture capitalists; we bought them out again in 2002). We never purposely spent money we didn’t have to make money. (And in this one I have to admit: that was the theory, at least, but not always the practice. We did have three mortgages at one point, and $65,000 in credit card debt at another. Do as we say, not as we did.)

6. We used service revenues to invest in products.

In the formative years, we lived on about half of what I collected as fees for business plan consulting, and invested the other half on the product business.

7. We minded cash flow first, before growth.

This was critical, and we always understood it, and we were always on the same page. See lesson number 5, above. We rejected ways we might have spurred growth by spending first to generate sales later.

8. We put growth ahead of profits.

Profitability wasn’t really the goal. We traded profits for growth, investing in product quality and branding and marketing, when possible, although always as long as the cash flow came first.

9. We hired people slowly and carefully.

We did everything ourselves in the beginning, then hired people to take tasks off of our plate. We hired a bookkeeper who gave us back the time we spent bookkeeping. A technical support person gave us back the time we spent on the phone explaining software products to customers. And so on.

10. We did for employees’ families as we did for ourselves.

Family members — not just our own family, but employee family members too — have always been welcome as long as they’re qualified and they do the work. At different times, aside from our own family members, we’ve had two brother-sister combinations, an aunt and her niece, father and daughter, and husband and wife.

And in conclusion…

Bootstrapping is underrated. It took us longer than it might have, but after having reached critical mass, it’s really good to own our own business outright. It might have taken longer, and maybe it was harder — although who knows if we could have done it with investors as partners — but it seems like a good ending.

Family business is underrated. There are some special problems, but there are also special advantages too.

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Torn: True Stories on Kids, Career, and Conflict of Motherhood

Books, Business Stories, Family Business, Work Life Balance, , ,

Today is the first day of distribution for Samatha Walraven’s book Torn: True Stories of Kids, Career, and the Conflict of Modern Motherhood. I got an advance copy and it’s a good read: for working moms, of course, but also for working dads, and everybody else who cares about understanding some of the people they work with. book cover

The book is a series of chapters from contributors, which makes it a great collection of experiences and point of view. It’s about how it feels, working through the problems, dealing with guilt, the importance of choice — which includes choosing to be stay-at-home mom too, by the way; there’s a whole section of pieces from that point of view too — and similar topics.

For example, this, from a Chapter called MommyCEO, written by Sabrina Parsons, my daughter, CEO of Palo Alto Software. I’ve taken a couple of snippets from a larger paragraph, just to give you the idea:

…there are things I have to deal with in the workplace that no man will ever face. No man will ever be in his office using a breast pump during a partner call … and very few men will ever face the reality that no matter how much government protection there is for maternity and family leave, there are some jobs that don’t allow a three-month leave of absence.

And here’s one from the following page:

Last night, as I sat in my boys’ room at bedtime, I thought about how much I have on my plate, how much I am juggling, and the items that fall by the wayside: my blog, my workouts, my sleep. My wingspan is simply not wide enough. If you saw me sitting in their room, you could actually envision this ‘wingspan’ — my arms stretched out wide between my sons’ beds so they can each hold a hand as they fall asleep.

That’s just one of 50 chapters, divided into seven sections, each written by a different woman. They divide into sections on balance, guilt, the superwoman, divided lives, the stay-at-home struggle, and, last but not least: “Maybe, Baby.”

Last week I posted about entrepreneurs needing empathy. Let’s have more empathy for the working moms, and for stay-at-home moms too, when they make that choice. This is a really good book.

Family Business Succession 4 Years Later: The Rest of the Story

Family Business, Work Life Balance, ,

There I was, minding my own business, watching my twitter flow, contemplating my next blog post, when what should appear in my twitter but … Sabrinawell, you can see it here to the right, in the Tweetdeck version: mommyceo is Sabrina Parsons, my second of five grown-up children, who has been running Palo Alto Software for the last four years. So I clicked the link to see what she wrote. We do talk a lot, of course, and we’re still in the same company, but I’ve been traveling, and I wasn’t aware of this one. She called her post Family Business Succession: four years later.

She writes (and the “he” in this is me):

He talked to me one day, and the next day, without much planning, or transition strategies, or anything, he told me and then he announced the change to the whole company.

That’s true. I did. She also credits me for staying out of her way:

Does he actually let us make the decisions? What happens when he doesn’t agree to the decisions? What does he do now? The simple answer to the question is yes, Tim actually did back off, and stay true to his word.

And that makes me proud. It isn’t easy. You build a company up and you get used to running things, and that’s a hard habit to break.  Me and my ego like to think that my every opinion should be treasured, but they aren’t. The novelty wore off and then it took some real adjustment. Fortunately, I passed  the baton to a strong woman with a lot of confidence in herself and a good team.

Sabrina’s post details some of the accomplishments. The company has done just fine for the past four years, after the big transition. We both have the right to be proud.

My biggest insight for others in similar situations is what I call the safe harbor concept. I didn’t just pass the command on and then sit around back-seat driving. I passed the command on and dove head first into blogging, twitter, speaking, and teaching. I didn’t want retirement. I love business, entrepreneurship, and business planning, so the change meant being able to do more of that. Without my having a lot of stuff to do, stuff that I think is important, I would have gone crazy; and probably I would have driven my daughter crazy, too.

An Entrepreneur’s Valentine’s Day Challenge

Entrepreneurship, Family Business, , , , , ,

Today is a good day to object to all the phony entrepreneurship lore that has people putting aside life and love for business. The whole mystique of giving it all, being obsessed, and burning the midnight oil, while it might inspire some, leaves me as cold as ice. It’s a ruse. Don’t buy it.

Despite the common myth to the contrary, business passion, persistence, and perseverance do not guarantee business success. Using your business as an excuse to ignore relationships, people, and family is a mistake. Do what you love, yes, and love what you do; but stop it, often, to love life and the people you live it with.

I don’t like Valentine’s Day. Words of love issued on Feb. 14 seem a bit like the last-minute chocolates, flowers, and sweet-smelling upscale soap in the picture here: contrived, diluted, over-wrapped, and useful only at the last minute, if at all.

So today on Valentine’s Day I refer to something I wrote in the normal course of business, on a day that wasn’t Valentine’s Day. In Relationship vs. New Business, originally written in March of 2009, a student had asked me in email:

Would you have still left your job and ventured out on your own if your wife were absolutely unsupportive and opposed to the idea?

I said no. And answering the question reminded me of how important my wife’s support was to my own career. This is from my answer:

This is a tough question, obviously. Every case is different.

But we do glorify the entrepreneurial a bit too much, and we glaze over some of the risks involved. Sometimes. I know, my answer sort of spoils the story and the rah-rah of entrepreneurship, the idea that we follow our passion and overcome all obstacles. But it’s the truth. Businesses fail, and it’s naive of us to forget that sometimes they fail despite our best efforts. Sometimes the reluctant spouse is just plain right. Sometimes the failure to get investment, the obstacles that accumulate, are a message.

And looking at it realistically, there’s no denying, like it or not, that a spouse who doesn’t buy into the dream adds to the risk. You don’t want to throw the family into the mix. Plan more, research more, and either answer the objections or accept that the world is sending you a clue. Keep your job. Gulp: if you still have one.

Here’s a true story: Before I left a good job to strike out on my own, my wife said “go for it; you can do it.” And she meant it. At several key points along the way, she made it clear that we would take the risk together. There was never the threat of “I told you so; why did you leave a good job, you idiot!” What she said was “if you fail, we’ll fail together, and then we’ll figure it out. We’ll be OK.”

That was in 1983. Failures, dark times, three mortgages and $65,000 in credit card debt at one point didn’t help our relationship. But what we started back then survived, and so did we; we’re still married.

There are two entrepreneurs in that true story of the conversation with my wife, not just one. And entrepreneurship and relationships, if you want both, take two people.

Today, on Valentine’s Day, there’s still room for a reminder that real relationships are important for the other 364 days of the year, too. Say it right today, yes. But live it, don’t just say it.

True Story: Do Entrepreneurs Like Risk?

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The answer to that question is: no. Not any more than the next person. They just like their business better. They took risks because they saw the goal. It was the dark side of building the company. They had to. But when it comes to savings and investment, no.

Well, actually, the most correct answer to that question is:

You can’t generalize. Some do, and some don’t. Entrepreneurs are a bunch of hard-to-categorize individuals, and who has good data, because all we really get are successful entrepreneurs.

True story: An investment advisor noted once that my wife and I have the most conservative portfolio he manages. He thought for just a second that might be odd for an entrepreneur. But then he thought about the risk we’ve taken over 30-some years of building our own business, financing it at times with multiple mortgages and credit card debt, signing owner guarantees all the time, raising children, paying colleges … walking around for years with the knowledge that something as beyond our control as one of the major software distributors going under, not to mention a software giant accidentally rolling over us,  could kill the business and leave us with a lot of debt and no house.

And it was suddenly clear to him. No wonder we don’t want to prospect now with what we’ve managed to save through the years. It was clear on his face, he understood. Capital preservation is what we want, now, not more risk. We’re safe now, at least to some degree, because of savings not dependent on the business. But we don’t want to lose those savings.

Yesterday, meanwhile, I read Are Business Owners Risk-Takers? Not When It Comes to Their Finances by Rieva Lesonsky on Small Business Trends.  It turns out, as Rieva points out while summarizing research, that the story above is a good example of exactly what she’s talking about in that post.

(Image credit: Ruslan Grechka/Shutterstock)

3 Things Every Entrepreneur Needs to Know About Exit Strategies

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I’ve been hearing that phrase, exit strategy, for about 30 years now. I used it a lot as a standard component of business plans back in the 1980s when I made a living writing them. And I ignored it myself as I built my own business, for really good reasons, for a long time. I figured out what it really meant, fairly late in the game, but in time for me. I think I can make it easier for you.

water cave exit1. The exit is when you sell the business.

Sorry if that’s obvious, but not everybody understands. In the classic high-tech high-end startup context, it’s either going public (meaning you get all registered up and sell your stock on a stock exchange, to anybody who wants to buy it) or being acquired by a larger company for publicly traded stock or money. In the small business, it’s selling the business to a buyer, or, in some cases, passing it on to the next generation of your own family.

If you don’t need outside investment, and you’re in the business for the long term, you might think you don’t need an exit strategy. You’re right, at least for a while. But even the long term becomes short term eventually.

2. Investors need exit strategies.

If you want outside investment then you have to have an exit strategy. Real investors don’t make money on your healthy company unless it sells all or part of itself. It’s cut and dried with outside investors: either you have a believable exit strategy, or investors don’t make money.

By the way, maybe I should say “if you need” outside investors instead of “want outside investors.” If you don’t need outside investors, believe me, then you don’t want them.

And if you don’t need outside investors, exit strategy can wait. But it will come.

3. Every entrepreneur eventually needs an exit.

OK, you’ve noticed I have a theme here. You need the exit strategy for sure, and right now if you need outside investors. But even if you don’t need outside investors, you’ll need the exit eventually.

You get older every day. Eventually you’re going to exit, whether you like it or not. Better to plan it. You get tired, you get health problems, you get older, and life changes. I was lucky, because we had a hard-working, loyal, smart next generation ready to go. That was more from good luck than good planning.

Think ahead. Look for the right opportunities. For example, there are some baby-boomer entrepreneurs feeling the need to sell during the great recession, having to take what they can get during a very bad market. I’m not saying they could have predicted the recession (black swan, in my opinion); but they could have been thinking about exit or succession.

Ultimately, it’s about people. Nobody lasts forever. You can aim for a business that survives a succession, or one you can sell. Aiming and planning doesn’t mean it will happen; but it can help.

(Image: Eugene Sim/Shutterstock)

Bonus material: 6 tips for involving your kids in your business