This is a subject that comes up a lot in conversation. Should I work with my family in business? I have two experiences in this field that I think might show a little of what it’s like to work in a family business at least with my family.
I am the outcome of what I would consider two very different styles of Entrepreneurship genetically speaking. On my mothers side my grandmother, grandfather, and great grandfathers were Entreprenuers. And on my Fathers side my dad and grandfather were entrepreneurs. Great Grandfather on my mothers side was a doctor in Spain who had businesses in Costa Rica. When the Spanish civil war broke out, his political bias was on the losing side and lost everything. It then came that my grandfather on my moms side had started a fruit business at one point having the largest Chilean fruit importation into the United States. Till he closed up shop when he retired and lived out the rest of his life enjoying his money. Or my grandmother who got into real estate when she moved to America, she always repeated the story to me as a kid “When we came here I only a $4 week allowance from your grandfathers salary to do with everything that we needed in the house, including food. But I always managed to save a dollar.” This got instilled into me as a child, these stories.
Then my grandfather on my dad’s side had started importing things from japan when he lived in Mexico, he could of been the radio shack of Mexico. But then the the Mexican peso crisis happened and he lost most everything. Then growing up my parents got divorced and seeing my dad go from having a lot of money when a business was good to being struggling when he would invest in random other business ideas he knew nothing of and lose his shirt and not have enough to send my mom child support for years. These situations were instilled into me as well as these little things i took notice in, we were very poor.
As it so happens by the time I was 14 I had already started walking every dog in my neighborhood, this might seem like a great and ingenious thing for a kid of that age. But I was already in the internet world playing ultima online, even paying to play it! Yet it never occurred to me you could make money on it, that slap in the face didn’t come till years later…
Anyways I digress, back to the working with family by the time I was in college my grandmother had a piece of property in a pretty pedestrian transited area in Florida. I had suggested that one of my friends open up a deli there and that I help run it. My grandmother decided it was a great idea and funded the project, the only issue was… she didn’t let me take part in it, nor even have a say in it or check anything. So she basically took half my idea… Needless to say the business failed, for many reasons. From what I would atribuite it to many factors. I then became the black sheep of the family in my grandmothers eyes. I led her wrong in a business decission. She to this day has not forgiven me for this bad business I led her too.
Now I would feel bad for this mishap if I was even allowed to have part taken in the project. I ended up being blamed for putting a chef and a person with some cash and a vacant place to work together. My grandmother is genius level when it comes to intelligence as well as business astuteness. But we all get it wrong some times, that deli was one of those examples. And I ended up suffering the consequences of this because I had put person A with person B and not allowed to partake in the rest of the idea. Had i been involved would the business have failed? There is no way of knowing.. But I do know my idea would of been fully developed not 10% of it taken and the rest never even heard or discussed.
Why? Because it’s family and sometime they see you as the kid, other times they see you as a adult, but if its something that they have a similarity too they normally think they know more. In a lot of cases they do, in some others they don’t…
Second example is working with my dad. I went into his company as the plant engineer, my goal was to make the business better in the time I was working there. My salary for this? $600 USD a month. That’s a “college graduates” starting pay (Family business hours.. ie 60-80)…
I could care less I had a free place to live, I could take the subway to work and I loved the city. Life couldn’t be better… Then came working with my dad. So my dad dedicates himself to a very special type of business. Bullet proofing cars. He can tell you guys the story some day if you care to know. I go into his plant knowing absolutly nothing about this business. So I do what I always do best, dive right into the situation. I first learned how to weld, then to use the plasma, then to actually dismantle a entire car inside and out, and have to modify the pieces and re-mantle it. I also learned how to paint a car, as well as how the entire electrical system of cars work and putting them back together. I did all this by hand it took me 6 month to learn his business from the ground up. Was I master welder by the time I finished? Heck no, but I could appreciate a good weld job and knew what was difficult to do so I could put the people up to the test. I also gained the trust and camaraderie of all the plant employees since they saw I was willing to get my hands dirty, or in some cases bloody.
Now that I knew the business like the back of my hand I go to my dad and tell him I need money to fix up the plant. He looks at me and says “No, when you show me your carrying your weight I’ll give you money to fix things.” This infuriated me, how could my dad not trust his own son? Needless to say I was on a mission to show him that with zero capital I could make him respect me. First thing to go, paint. I felt that was the one object I could possibly make them use less or get more stringent on painting requirements.
I started investigating and having painted cars before I remembered about how much paint it took me to paint areas of the cars given how much of a novice I was. Something seemed fishy when I started going over the numbers. I walked over to a mechanic shop down the road and asked him how much paint it takes to paint the outside of a car completely. I had calculated that based on my skills would be about 3-4 liters. I was wrong, they can do it for 2 if they are decent to good painters. This was surprising to me as I went back through the papers ontop of papers of transactions and cars painted and paint bought. We had been using on average 4-5 liters per car to paint them. There was only two options for this situation, someone was stealing or our painters/paint guns suck. Either way it had to change.
I went home and discussed this with my dad since he works out of the office which is on the other side of town. I told him I thought some one was stealing, he told me I was probably wrong since his painters had been with him for over 5 years and the paint costs haven’t gone up drastically. So once again my dad thought I didn’t know what I was talking about.
So I went to the head painter whom I suspected of stealing and asked him how much paint it took to paint random things on the car since I told him that I was thinking of painting my brothers car door as a prank, he told me it would take about 200 milliliters.
I let a month go by, with the heavy grind of the business I needed him to forget I was even looking at paint. In that mean time I worked on re-engineering the design we used to bullet proof cars and reduced the ballistic gaps by 60%.
Month passes and I go to all the painters and tell them I need them to paint each door. I gave each of them a gun with 400 milliliters of paint. Each painted the door… 2 of the 3 painters used 200 milliliters.. one used all 400.
I call the head painter into my office and ask him “Why are our paint costs so high?”
he looks at me and says “Well we have to modify the cars and sometimes repaint”
I reply “How many mililiters would it take to paint a door you just painted once?”
“Well at least 400 for the best painters, as you saw I took me all that to paint it in front of you”
I just look at him
After what of seemed like a eternity to him since I could tell he was visibly nervous, I reply “so why was it that the apprentice did it with half of what you did? And the other painter did it with a LOT less than the apprentice? And you specifically told me it would take 200 to paint a door”
He froze
“but I, ugh, ummm”
He was fired that night, Our costs dropped significnatly, by over 50% that next month, I then was able to use that to bankroll new guns which further cut costs by 20% more. With the new design of the cars it took a extra day to impliment my modifications so I had to reduce the time it took for a car to get bullet proofed. With the savings of the paint I was able to get better bending machines, as well as changing the layout of the process of cars I reduced on a level 3 by up to 4 days, considering it can take 3-4 weeks to do a level 3 I felt pretty proud of myself. I then also got our scrap metal a 100% increase on buy price and reduced our waist by over 40%.
I also reworked the employee payment plan so they weren’t as depending on the wrath of my dads mood on bonuses and set up a system that cut my dads expenses significantly as well as made it so employees salaries were more stable and predictable for the peace of mind of them.
I also negotiated lower prices with our suppliers and even had some extend and up the amount of time we had to pay them back, and even negotiated incentives to get them paid earlier by offering us a discount if we paid w/ in x amount of time depending on the item.
Come my year anniversary working for my dad I go up to him with a list of things I have done, a list of things I would like done to the business, including a few other employees I feel he should fire as they produced absolutly nothing beneficial to the company.
My dad read the letter told me he would take it into consideration. And then we got into a fight as to how he still had seen no benefit of anything I had done in his plant.
I quit the next day.
So, in conclusion working with family.. I don’t suggest it.
