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INTRO Family Business

Mats83

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I've Read UNSCRIPTED
Mar 28, 2018
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Montreal
Here we go, my first post.

I'm currently 34 years old, married with my first baby on the way. My wife has a good job with a six figure salary and I work in family business my father started. My father worked his butt off to build what he did and I've been there the past 15 years full time trying to take it further and let him slow down if desired. The company is roughly 70 employees and has annual revenues around $60 million. Everything sounds great right? Read on.

I won't go in to too many details about the industry, will likely do so when on the Inside, but I can say it's in wholesale distribution. While $60 million sounds great, net profits are around 2%. If you do the math you'll say that's a nice living and it certainly is, but it's a lot of work and risk for the reward. The other major problem is that roughly 60% of our business is from one customer. The relationship over the years seems to be headed in a negative direction as they know their position of power and often wield that power without respect to us. Lastly, this business certainly violates Time as I'm currently involved in all aspects of it as well as Scale. We are in a large market but not likely to expand beyond our region. I'm extremely grateful for what my father has built and provided but have always had a burning desire to build something on my own. I read, research and think constantly when not at work, but have not acted yet. I guess that makes me a wantrepeneur and it's driving me nuts.

I can say that having a lead position at the family business has definitely helped me develop skills needed to succeed as an entrepreneur. From dealing with customers and staff, the stresses needed to overcome, and most importantly being presented with problems that don't seemingly have solutions, at least not with my skill set, but having to solve them regardless are lessons and experience that have been earned.

I've read TMF and right when I finished it, I read Unscripted. I have to say that chapter 35 in Unscripted is the best chapter I have ever ready in any book. Discussing the Need commandment and especially giving the reasons people don't start struck a chord. I've joined this forum to gain knowledge and light that spark. I know once it's lit I won't stop.

I don't want to make this intro too long so I will stop here but I look forward to interacting and learning from you all.
 

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Shepherd

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Here we go, my first post.

I'm currently 34 years old, married with my first baby on the way. My wife has a good job with a six figure salary and I work in family business my father started. My father worked his butt off to build what he did and I've been there the past 15 years full time trying to take it further and let him slow down if desired. The company is roughly 70 employees and has annual revenues around $60 million. Everything sounds great right? Read on.

I won't go in to too many details about the industry, will likely do so when on the Inside, but I can say it's in wholesale distribution. While $60 million sounds great, net profits are around 2%. If you do the math you'll say that's a nice living and it certainly is, but it's a lot of work and risk for the reward. The other major problem is that roughly 60% of our business is from one customer. The relationship over the years seems to be headed in a negative direction as they know their position of power and often wield that power without respect to us. Lastly, this business certainly violates Time as I'm currently involved in all aspects of it as well as Scale. We are in a large market but not likely to expand beyond our region. I'm extremely grateful for what my father has built and provided but have always had a burning desire to build something on my own. I read, research and think constantly when not at work, but have not acted yet. I guess that makes me a wantrepeneur and it's driving me nuts.

I can say that having a lead position at the family business has definitely helped me develop skills needed to succeed as an entrepreneur. From dealing with customers and staff, the stresses needed to overcome, and most importantly being presented with problems that don't seemingly have solutions, at least not with my skill set, but having to solve them regardless are lessons and experience that have been earned.

I've read TMF and right when I finished it, I read Unscripted. I have to say that chapter 35 in Unscripted is the best chapter I have ever ready in any book. Discussing the Need commandment and especially giving the reasons people don't start struck a chord. I've joined this forum to gain knowledge and light that spark. I know once it's lit I won't stop.

I don't want to make this intro too long so I will stop here but I look forward to interacting and learning from you all.
Welcome to the board. A couple questions right off the bat:
Do you have equity in the company?
Do you have a succession plan in place?
How is your relationship with your father?
 
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Mats83

New Contributor
I've Read UNSCRIPTED
Mar 28, 2018
10
12
25
Montreal
Welcome to the board. A couple questions right off the bat:
Do you have equity in the company?
Do you have a succession plan in place?
How is your relationship with your father?
Thanks for taking the time to read and the welcome.

My father is 100% owner.
The succession plan is for me to take over. While a large number of parents in this position sell the company to the kids, my father has made it clear he built it for his kids and will transition it to me if I'm interested. If not, he would sell it.
Both my parents as well as siblings are involved as well. My relationship with my father is great but the business certainly creates tension and challenges within the family dynamic. Although the relationship between one of my siblings and I has pretty much been severed, the rest of the family bonds are strong.
 

Shepherd

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Thanks for taking the time to read and the welcome.

My father is 100% owner.
The succession plan is for me to take over. While a large number of parents in this position sell the company to the kids, my father has made it clear he built it for his kids and will transition it to me if I'm interested. If not, he would sell it.
Both my parents as well as siblings are involved as well. My relationship with my father is great but the business certainly creates tension and challenges within the family dynamic. Although the relationship between one of my siblings and I has pretty much been severed, the rest of the family bonds are strong.
I am also in business with my father in a sub-section of a larger farm business owned by my father and my uncle, so I get the unique dynamics of your situation. Does your father see the same issues with the business that you do? Are there ways you can branch out under the umbrella of the parent business with your dad as a partner/advisor?
 
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Mats83

New Contributor
I've Read UNSCRIPTED
Mar 28, 2018
10
12
25
Montreal
I am also in business with my father in a sub-section of a larger farm business owned by my father and my uncle, so I get the unique dynamics of your situation. Does your father see the same issues with the business that you do? Are there ways you can branch out under the umbrella of the parent business with your dad as a partner/advisor?
For sure we see and discuss the same problems, but the mentality to solving them is completely different. We have good employees but are lacking high level people. My opinion is we need to invest a one or two good people to help on the strategic end but my father doesn't see it. He thinks that together we can continue putting in 60+ hours weeks to solve everything. My father has spent his whole life working at that rate and I really don't want to do the same. On one hand I understand his point as margins in the industry are so tight so investing in a large salary will have an impact but I think we're at the stage where we need to give it a try.

I think he is getting close to coming around to the idea. Now I need to make sure to support that new hire to succeed.
 

MJ DeMarco

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Thanks for the introduction, sounds like a lot on your plate.

my father has made it clear he built it for his kids
But do you want it?

It's like saying, "I built you a house in the Amazon jungle."
 
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Mats83

New Contributor
I've Read UNSCRIPTED
Mar 28, 2018
10
12
25
Montreal
Thanks for the introduction, sounds like a lot on your plate.



But do you want it?

It's like saying, "I built you a house in the Amazon jungle."
It's something that I battle with constantly and often flip flop opinions. For months at a time I'll be fully on board and motivated, then I'll go through periods of wanting to prove myself independently of the business. In an ideal world I would build a business in my spare time and once proven, either try to put the family business more on autopilot or sell altogether. Part of the hesitancy is fear of failure as I know staying put will likely be financially rewarding, but also the effect it would have on my father. It would be much easier for my father to accept selling or stepping away from the business if he knew I had succeeded elsewhere. That's up to me though and so far I've proven nothing.
 

cy-

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Very interesting introduction, thank you a lot for that.

In terms of your father's company, what if you declined to run it further and he sold it, and you then used the money - or some of the money - to approach the industry with a different angle?

Improving something else related to the supply chain of the companies working there or something alike.

I see a few benefits if you choose to do so:

1. You will know people in the industry, as you have and have had clients in the industry
2. You will have a name (Maybe its good, maybe its not - I'm sure you know)
3. You will have liquidity to get it off the ground fast
4. You will have a good idea of the demands and improvements needed for the customers and companies working within the industry

I'm sure you have a good view of your situation but I'm thinking at least it might be a good entrance point if you manage to find a good way to approach the industry and the market within.

Great post - it sounds like you are in an interesting yet difficult position so I hope you will find a way to take it further
 
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Mats83

New Contributor
I've Read UNSCRIPTED
Mar 28, 2018
10
12
25
Montreal
Very interesting introduction, thank you a lot for that.

In terms of your father's company, what if you declined to run it further and he sold it, and you then used the money - or some of the money - to approach the industry with a different angle?

Improving something else related to the supply chain of the companies working there or something alike.

I see a few benefits if you choose to do so:

1. You will know people in the industry, as you have and have had clients in the industry
2. You will have a name (Maybe its good, maybe its not - I'm sure you know)
3. You will have liquidity to get it off the ground fast
4. You will have a good idea of the demands and improvements needed for the customers and companies working within the industry

I'm sure you have a good view of your situation but I'm thinking at least it might be a good entrance point if you manage to find a good way to approach the industry and the market within.

Great post - it sounds like you are in an interesting yet difficult position so I hope you will find a way to take it further
Thank you for the post and compliments, it's very much appreciated. Before getting in to the main part of your post, I'll address the "difficult position". While I certainly have some challenges in front of me, I am most definitely in a fortunate position. I feared when posting that people would think I'm a complainer and I hope that is not what is conveyed because I'm very grateful to have the opportunities I do.

Regarding your post, we are in an industry dominated by a few, billion dollar multinationals. There are huge barriers to entry and massive amounts of capital expenditure required. The family business has an excellent name and is well set up so selling and starting from scratch is not an option I would consider, plus I think my father would take it as an insult. One viable option though is to downsize, tell our major customer to find another supplier and build from there. That is something I have been considering.
 
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cy-

Bronze Contributor
Read Millionaire Fastlane
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Feb 17, 2017
101
244
165
Europe
Thank you for the post and compliments, it's very much appreciated. Before getting in to the main part of your post, I'll address the "difficult position". While I certainly have some challenges in front of me, I am most definitely in a fortunate position. I feared when posting that people would think I'm a complainer and I hope that is not what is conveyed because I'm very grateful to have the opportunities I do.

Regarding your post, we are in an industry dominated by a few, billion dollar multinationals. There are huge barriers to entry and massive amounts of capital expenditure required. The family business has an excellent name and is well set up so selling and starting from scratch is not an option I would consider, plus I think my father would take it as an insult. One viable option though is to downsize, tell our major customer to find another supplier and build from there. That is something I have been considering.

Hmm, I see..

In terms of your father taking it as an insult, I think that if you manage to show success in the industry with yours and his name to it, then he would be very proud instead.

But I see the issue, I can definitely see that industries with huge billion dollar companies dominating the market can be difficult to sort of squeeze in with - see for instance the ISP industry etc.

I can't help to feel though, that there has to be some sort of approach where you can be of great use and grow through there. Because billion dollar companies dominating a market can also be an advantage, for example:

They can be big customers if you manage to create something that they use in their process (Like the big one you have already). Downside is of course if huge parts of your revenue is dependant on a single or few of these.

Secondly they can also turn out to be good in terms of acquiring your company as they generally have liquidity and like to get competitors out of the way.

Here in Denmark our main ISP "TDC" likes to buy competitors whenever they pop up, and they usually pay very hefty amounts even if they run with somewhat huge net loss..

They simply don't like to lose their customers and having to compete on price I suppose.
 
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Mats83

New Contributor
I've Read UNSCRIPTED
Mar 28, 2018
10
12
25
Montreal
Hmm, I see..

In terms of your father taking it as an insult, I think that if you manage to show success in the industry with yours and his name to it, then he would be very proud instead.

But I see the issue, I can definitely see that industries with huge billion dollar companies dominating the market can be difficult to sort of squeeze in with - see for instance the ISP industry etc.

I can't help to feel though, that there has to be some sort of approach where you can be of great use and grow through there. Because billion dollar companies dominating a market can also be an advantage, for example:

They can be big customers if you manage to create something that they use in their process (Like the big one you have already). Downside is of course if huge parts of your revenue is dependant on a single or few of these.

Secondly they can also turn out to be good in terms of acquiring your company as they generally have liquidity and like to get competitors out of the way.

Here in Denmark our main ISP "TDC" likes to buy competitors whenever they pop up, and they usually pay very hefty amounts even if they run with somewhat huge net loss..

They simply don't like to lose their customers and having to compete on price I suppose.
Absolutely, acquisitions are very common in the industry. One of the companies is aggressive with their acquisitions, the other pretty much buys the customers. It would be something for sure I'd be interested in looking in to if the offer came but with such a large portion of the business tied to one major client, it certainly devalues the business.

You are spot on though, a lot of customers don't like dealing with the huge multinationals and that creates opportunities, especially after acquisitions of our competitors.
 

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