Entrepreneurism and the Family

Stephen DeAngelis

March 11, 2011

In past posts on entrepreneurism, I have noted that entrepreneurs often look to family for investment capital to start a business before looking elsewhere. In the end, that’s all fine and good if the enterprise is a success. It can create real tension in a family if the business fails. Financial interactions, however, aren’t the only kinds of family involvement that crop up when starting a business. For example, if an entrepreneur can’t afford an office and starts a business out of his or her home the family’s activities are necessarily affected. “Starting a business from home isn’t ideal — or even possible — for every entrepreneur. In addition to neighborhood noises, some [entrepreneurs] have to put up with … unwanted visitors or attention-seeking children or pets.” [“When Home Is Where the Office Is,” by Sarah E. Needleman, Wall Street Journal, 21 November 2010]. While maybe not ideal, working out of one’s house is not uncommon. Needleman explains:

“Home is where the office is for more than half of U.S. entrepreneurs, according to the Small Business Administration. The arrangement is particularly popular among those just starting out since leasing a commercial space, outfitting it with furniture and keeping it clean can be costly.”

If you find yourself in a position that requires you to work out of your home, Needleman provides some suggestions that may help you avoid distractions and stay focused on your business. She concludes:

“If you’re building a business at home full- or part-time, there are ways to stay motivated and establish a professional image, says Mary Mihaly, author of ‘The 250 Questions Every Self-Employed Person Should Ask.’ Set a schedule, add a business phone line and secure a post-office address. Tell family, friends and neighbors to avoid interrupting you while you’re on the clock. Make time to meet with other entrepreneurs and professionals in your industry. Look for events hosted by trade associations, chambers of commerce and local business groups. Get fully dressed before starting the day. While wearing business attire isn’t necessary, Ms. Mihaly says, ‘you won’t feel like you’re at work if you’re paddling around in fuzzy slippers and jammies.'”

Whether you work in or out of your home, beginning a business can have a significant impact on your family, especially if you have children. Entrepreneur and venture capitalist Luke Johnson has some experience in this area (he has three children under the age of six). He asks, “Are high-flyers any good at the ‘ultimate start-up’ – bringing up children? Or is the conflict between relentless ambition and sound parenting simply too great?” [“Your kids are your paramount investment,” Financial Times, 29 September 2010]. His answer:

“With three children under six years of age and various business involvements, balancing the competing demands on my time is a challenge. I get the priorities wrong sometimes – but suspect I’m not alone. Most entrepreneurs I know work 60- or even 80-hour weeks. When they get home they are often exhausted from the struggle of building a company and trying to fulfil their dreams. Being the perfect mum or dad in such circumstances is not easy.”

Johnson notes that on average “today’s parents spend far more hours a week with their children than in the past.” But entrepreneurs aren’t your average parents and time with children may be hard to come by. He continues:

“By their nature entrepreneurs are highly competitive, and that urge does not diminish outside the office. … Inevitably, high achievers want their own little darlings to be top of the class, superb at sports and welcomed into the right universities. All that takes not just money but personal effort and participation, too. Being head of a family is not like managing a business – you cannot delegate bedtime stories, school parent evenings and all the other small delights of parenthood to staff. And compensating for absence by spoiling children with material possessions is a very poor substitute for actually being there. The most impressive offspring of the high achievers are those who enjoy close bonds with their parents, and understand the importance of self-reliance and the obligations of wealth.”

What I take from Johnson’s article is: to become a great parent a good entrepreneur needs to make time for his family — just as he makes time for his business. As noted above, Johnson recognizes that making time for family is not easy. He continues:

“The always-on nature of commerce today doesn’t help the cause. Clients and deals will not wait – if you want to get ahead you are expected to be available to answer e-mails and mobile calls at all hours. I am sure many children of the rich and powerful hate devices such as BlackBerrys, for they have induced a form of attention deficit disorder among many fathers, who are endlessly distracted from the school play or carol concert. As children mature, so entrepreneurs can relate to them about their work. You can never tell which children will reject their parents’ vocation, and which will embrace a similar career path. Many of the most enterprising individuals I’ve met learnt about business from close relatives as they were growing up – such an education is vastly better than any MBA. But often the burden of inheritance can undermine lives. I think every entrepreneur would agree with William Thackeray when he said: ‘I would rather make my name than inherit it.’ Being a great parent is harder than building a business. And in truth the result endures far more than any financial construct. Ultimately, companies and money come and go, but children really are the future.”

The late David O. McKay once stated the same idea this way: “No other success can compensate for failure in the home.” What if your business relationship goes deeper than simply sharing the family home as an office? Or trying to make time to spend with the family? Collen Debaise, Sarah E. Needleman, and Emily Maltby write about “the pleasures and perils of running a business with your spouse.” [“Married to the Job (And Each Other),” Wall Street Journal, 14 February 2011]. They write:

“If love is a battlefield, then running a business with your valentine means living on the front lines 24/7. About a third of all family businesses are husband-and-wife teams. While some sweethearts can handle the dual pressure of building a relationship and a company, many others warn it’s a difficult path. The constant interaction, the strain of juggling work and personal life, and the trials of entrepreneurship—especially in a difficult economy—can take a toll. Lots of couples don’t see eye to eye or can’t handle the stress, financial risks or sheer amount of time that ‘copreneurs’ must spend together. Glenn Muske, a small-business specialist at North Dakota State University, has studied copreneurs for nearly 15 years. In the worst cases he’s seen, the stress ‘took down the business and it took down the marital relationship. I don’t think everyone is cut out to do it.'”

If you are married, I suspect that you might just have asked yourself if you could go into business with your spouse and make it work. Debaise, Needleman, and Maltby claim that the secret to making it work is having “a good marriage in the first place.” They explain:

“Many couples say the complementary personalities that brought them together make them logical business partners. In the best cases, couples are ‘truly so in sync with one another that the business becomes an extension of the relationship they have with one another,’ says Mr. Muske. Those couples succeed as business partners because they bring trust, communication and commitment to the table. They have clearly defined roles within the company and consider the business a ‘way of life’ that gives them more flexibility as a family, he says.”

Debaise, Needleman, and Maltby continue their article with “the tales of three couples who have run businesses together, with mixed results.” If you and your spouse are thinking about becoming “copreneurs,” you might want to read about the experiences of others who have already taken that path. Husband-wife business relationships are not the only ones that can develop. Nowadays you don’t see as many “& Son” signs as you used to; but parents and children are still going into business together. Debaise, Needleman, and Maltby call going into business together “the ultimate test of the parent-child relationship” [“Parent & Child Inc.,” Wall Street Journal, 15 November 2010]. They write:

“We’re not talking about founders of established companies passing the reins to the next generation. We’re talking about Mom or Dad starting a company with the person whose diaper they’ve changed. Or kids getting a start-up off the ground with the person who taught them how to drive. It’s definitely not a traditional path to entrepreneurship, but a number of families are now giving it a shot. Part of the reason, no doubt, is the economy: More parents are being laid off and more kids can’t find a job to begin with. But whatever the reason, parent and child often find that teaming up brings strong advantages.”

Debaise, Needleman, and Maltby explain that there are both upsides and downsides to parent/child businesses. They continue:

“For one thing, it can be much easier to put your faith in someone you’ve known your whole life than in a colleague or a friend. And in many cases, parents and children have already spent years helping each other out. ‘There’s a level of trust I don’t think you can get with anybody else besides a parent,’ says Lauren Russell, who runs a furniture business with her father, Larry Strassner. ‘There’s such a strong genetic bond that it lets some of the walls down.’ Just as important, the older and younger generations each have resources that the other desperately needs these days. A recent college graduate might need the industry experience, connections and business sense he hasn’t had time to acquire on his own. A parent, meanwhile, might need her child’s technology skills, Internet savvy and social-media know-how. ‘It makes perfect sense,’ says Wayne Rivers, co-founder of the Family Business Institute in Raleigh, N.C., who has witnessed numerous parents and children running businesses together. But there can be land mines, too, he warns: ‘There’s always the parent-child dynamic, and when you add a business, with all its moving parts, it’s complicated.’ Most commonly, parents—even when they’re not technically the boss—assume a domineering role in the business, he says. And sometimes children—no matter what their age—aren’t respectful of their parents’ experience. Mr. Rivers recommends that parent-child business partners clearly outline their roles, responsibilities and expectations before going into business together.”

One of the most public parent/child business relationships that has gone bad is the one between the Teutuls (Paul, Sr. and Paul, Jr.) who used to work together at Orange County Choppers. That relationship has deteriorated in front of millions of viewers on Discovery Channel’s “American Chopper” (now titled “American Chopper: Senior vs. Junior). But not all parent/child relationships are as dysfunctional as the Teutels’. Debaise, Needleman, and Maltby conclude their article with stories about some parents and their children who opted to go into business together (a mother/daughter, a father/son, and a father/daughter). They are worth reading if you are thinking of teaming with either your parent or your child.

The sad truth is that, if you are a female entrepreneur who also wants a family, the path to success is even more difficult and the challenges more severe. Dale Winston, chairman and chief executive officer of the executive search firm Battalia Winston, insists, “If you’re going to assume top-level power and responsibility in your professional life, you’ll be forced to make sacrifices either at work or at home.” [“A Woman CEO’s View: No, You Can’t Have It All,” Forbes, 17 March 2009] She continues:

“The female who wants both a family and a path to the top faces a far greater challenge than any man. When someone from the school calls, they ask for the mom. When a child is sick, she wants her mommy. Sociologically, women bear the most demanding burden in raising a family. We’ve come a long way since June Cleaver, who was always home with a batch of cookies at the end of the school day, but the corporate mom who wants it all still has no choice but to seek it along a road of compromise.”

Whatever your circumstances, when you set out on the road to entrepreneurship, you need to ask yourself some serious questions about how your endeavors are going to affect your family relationships. You can use those answers to help you establish the priorities that will guide your life and prevent disappointment and disillusionment.