Family Business

This week I learned about family businesses as well as the option of buying existing businesses. I have thought about what it would be like running a business with family.  I  have been intrigued by the idea as it would secure incomes for some in my family.  Despite that I always saw it as not being very desirable and could imagine the difficulties that may arise from doing business with family.  One quote from this week’s lesson by Eric Colonius reads ““When it works right, nothing succeeds like a family firm.  The roots run deep, embedded in family values.  The flash of the fast buck is replaced with long-term plans.  Tradition counts”. This was interesting as there are a lot of good things that come from family businesses. I learned that 80 percent of businesses in the U.S. are family businesses and they employ half the nation’s work force.  Only thirty percent of first generation businesses make it into the second generation due to no management succession plan.

For my 100 dollar challenge I have picked up a decent used tire from a garage sale.  I have felt pretty rushed in this project the last couple weeks with a busy schedule on my hands and definitely feel like I could be more successful if I had more time to put into it.  I am attempting to sell the tire for 35 dollars and picked it up for 10 dollars at a garage sale. Also I am beginning to work on my five minute narrated PowerPoint presentation for this project as the semester is finishing up.

12 keys for starting a family business from startupnation.com:

  1. Set some boundaries.It’s easy for family members involved in a business to talk shop 24/7. But mixing business, personal and home life will eventually produce a volatile brew. Limit business discussions outside of the office. That’s not always possible, but at least save them for an appropriate time — not at a family wedding or funeral, for example.
  2. Establish clear and regular methods of communication.Problems and differences of opinion are inevitable. Maybe you see them already. Consider weekly meetings to assess progress, air any differences and resolve disputes.
  3. Divide roles and responsibilities.While various family members may be qualified for similar tasks, duties should be divvied up to avoid conflicts. Big decisions can be made together, but a debate over each little move will bog the family business down.
  4. Treat it like a business.A common pitfall in a family business is placing too much emphasis on “family” and not enough on “business.” The characteristics of a healthy business may not always be compatible with family harmony, so be ready to face those situations when they arise.
  5. Recognize the advantages of family ownership.Family-owned businesses offer unique benefits. One is access to human capital in the form of other family members. This can be a key to survival, as family members can provide low-cost or no-cost labor, or emergency loans. Firms run by trusted family members can also avoid special accounting systems, policy manuals and legal documents.
  6. Treat family members fairly.While some experts advise against hiring family members at all, that sacrifices one of the great benefits of a family business. Countless small companies would never have survived without the hard work and energy of dedicated family members. Qualified family members can be a great asset to your business. But avoid favoritism. Pay scales, promotions, work schedules, criticism and praise should be evenhanded between family and non-family employees. Don’t set standards higher or lower for family members than for others.
  7. Put business relationships in writing.It’s easy for family members to be drawn into a business startup without a plan for what they will get out of the business relationship. To avoid hard feelings or miscommunication, put something in writing that defines compensation, ownership shares, duties and other matters.
  8. Don’t provide “sympathy” jobs for family members.Avoid becoming the employer of last resort for your kids, cousins or other family members. Employment should be based on what skills or knowledge they can bring to the business.
  9. Draw clear management lines.Family members who often have a present or presumed future ownership stake in the business have a tendency to reprimand employees who don’t report to them. This leads to resentment by employees.
  10. Seek outside advice.The decision-making process for growing a family business can sometimes be too closed. Fresh ideas and creative thinking can get lost in the tangled web of family relationships. Seeking guidance from outside advisors who are not affiliated with any family members can be a good way to give the business a reality check.
  11. Develop a succession plan.A family business without a formal succession plan is asking for trouble. The plan should spell out the details of how and when the torch will be passed to a younger generation. It needs to be a financially sound plan for the business, as well as retiring family members. Outside professional advice to draw up a plan is essential.
  12. Require outside experience first.If your children will be joining the business, make sure they get at least three to five years business experience elsewhere first. Preferably in an unrelated industry. This will give them valuable perspective on how the business world works outside of a family setting.

Source: https://startupnation.com/start-your-business/plan-your-business/12-keys-to-family-business-success/

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Franchisee

This week I learned more about Franchising. There are definitely clear pros and cons to taking on this type of business adventure.  I don’t think I would prefer to franchise as I am more drawn towards creating my own company.  I don’t like the fact that you typically sign a contract for around 20 years to run the franchise.  Also, you are still following others guidelines to how the business will be ran.  This is good as it is sort of a safety net in the fact that the process has proven success.

I enjoyed the story of Nicole Donnelly who snowboarded for seven years and had lived out of her car.  She ended up creating leg warmers for babies and becoming a very successful businesswoman. She is another great ActonHero.org example of entrepreneurship.

For my 100 dollar challenge I am attempting to sell a tire that I got off of a friend for 10 bucks.  I am still in search of a product that I am confident in the ability to resell it.  I feel that if I had weekends off I would have had a better chance and searching garage and yard sales but have been mostly limited to word of mouth and internet sale sites.

Gold Honey

I was impressed this week by the videos. One that stood out to me was the company “Burts Bees” who sells beauty products made out of beeswax. The company began with one beekeeper selling honey at a roadside stand. A partnership was made between Burt and Roxanne in whom the company was born. Burts Bees was recently bought by the Clorox Company for more than 900 million dollars. I liked how the video demonstrates the value of being unique and standing out. They demonstrate good marketing as products stand out on the shelves with Burts bearded face on the packaging, and it is unique as it is made up out of beeswax.  I was reminded to be conscious of debt, to take risks, and to believe in my product.

I also learned of the benefits of the BPI or Business Profit Improvement in which I will be better able to meet the needs of the business, market, and ensure continued success:

-Understand how effectively your team is meeting the needs of customers and other –   departments in your company.

-Revise your hiring strategies to improve skill levels and expertise in your team.

-Save time and money by simplifying overly complex and expensive processes.

-Identify entirely new processes that enable your firm to provide top-notch customer service  while reducing costs.

For my 100 dollar challenge I am attempting to find another product to sell. I have not found what I will buy yet but am certain that with patience I can break 100 dollars in profit on my next sale. My current profit is 94 dollars excluding the 20 dollar start up.

Hire slow, fire fast.

This week’s Entrepreneur Matt Stewart stood out to me when he stated that in most of his business failures he was trying to make money.  In his successes, he was focused on completing the mission of the business.  Being a successful businessman he admitted to having his share of failures as well.  This was a good reminder that failure only counts when we stop trying to achieve success.

This week Harvard Manage Mentor reminded me of the principle within the book “Good to Great” of having the right people in your company.  It pointed out that we should not always hire based on a yardstick measuring experience, sometimes it is necessary and better to hire based upon a person’s talent and potential.  The decision making matrix seemed useful to me in comparing candidates.  Data such as: personal characteristics, education, training, compatibility, ability to grow, elimination factors, overall assessment can be used in the matrix for comparison.

The principle of having the right people on the team or “on the bus” was stressed this week.  It is important to “hire slow, and “fire fast” when necessary.  When keeping an unproductive employee a disservice is done to the company, the productive employees, and the unproductive employee himself. I can think of times I have had customer service experiences such as observing others being served or my own experience where I have thought to myself, this person may not be the right person for this job.  One excellent example of a company that hires the right people is the company In-N-Out. The employees seem to all have great attitudes, you can see them working hard to get orders out, and they seem to embrace busy situations from my experience.  It would be interesting to see how they approach hiring and the process they use to select team members who seem to compliment the business well.

For my $100 Dollar Business Idea I sold the motorcycle jacket that I purchased for 20 dollars for the amount of 44.00 plus shipping.  Shipping was spent entirely on the shipping of the item and I am currently waiting my funds to clear PayPal to re-invest them into the challenge.  This brings my entire earnings for this project to just over $100 dollars. I have to pay eBay a final value fee for allowing me to sell on the website.  I am now searching for my next item to buy and sell with the budget of $100.