I am 25 years old, single, and have a job earning 75k a year with an
upcoming promotion, but I am not happy with the hours or the type of
work. It is an intense environment in sales/client service for a
pharmacuetical research company, which is an industry that I am not
passionate about. While I am close to the city, I do not have much
free time and I am not very happy.

My father has been discussing with me the option of returning to
the growing family business as head of marketing. I am responsible for
the business and started it with my father. The company is an
Internet/catalog retailing company that I am very passionate about,
located in my hometown. He's offering me a small reduction in salary
with a current 11% ownership in the company. Furthermore, I have the
potential to eventually receive an equal portion of the profit and my
father's 58% portion of ownership as well. In addition, the job would
be flexible in hours and allow me to set my own course. The success of
the business would be greatly impacted by my performance, while
reporting to my father. I would be under a lot of pressure to succeed
and at the very least would need to generate the revenue to support my
compensation and marketing investments. We have had a serious amount
of money invested into the business over the last four years and we
are just now reaching profits.

Settling into a focused career that is challenging and
rewarding is important to me. With that said, I believe I have two
options. Option one, do I continue with my frustrating job and return
to school to further my education, and eventually find another more
fascinating job? Second option, do I move near home and return to the
family business an hour from the city, work hard, and risk the
increase of a difficult working relationship with my father as I am
often micro-managed? My father and
I have had numerous difficulties working together in the past, but we
each respect our individual talents.

This is not a simple question, but any sound direction and
suggested questions to help me find the answer would be helpful. Any
specific research or case studies on young adults as successors to a
family business and the associated difficulties would be helpful. Any
articles or summaries of family arrangements around legal ownership
agreements would provide me insight as well, including all the issues
that should be addressed first, prior to any family arrangement.

Reference Websites:
http://www.umass.edu/fambiz/
http://www.nolo.com

Thank you very much for your help. I am looking forward to a
thoughtful response.

<Unfortunately the statistics for the success of family business with
following generations make depressing statistics. Less than 30% of
family businesses survive the second generation and only 10% make it
to a third generation. What can make the difference between survival
and failure is forward planning.

One of the most important issues that need to be addressed in family
businesses is a good legal framework. Often family relationships are
based on trust and family members do not always see the need to
formalise agreements with legally binding contracts. It is therefore
important to ensure that a good legal framework is set up.

The following points should be addressed:

1. The role of each person in the company.
Define each persons role in the company and their compensation with a
written contract.

2. Shareholder agreement.
There should be a shareholder agreement that details the rights and
obligations of the shareholders. Including a buy-sell agreement can
ensure that stock remains in the family and is not sold or transferred
to a third party.

3. Settling disputes.
Set up a system for arbitration to settle disputes. Getting an opinion
from an impartial third party can help. Consultants can be
particularly useful as they can give unbiased onjective advice.

4. Succession planning.
The death or retirement of  the business owner can result in the
failure of the business if no forward planning has been done. Pay
particular attention to estate taxes which can cripple a family
business. Estate taxes can be paid off by taking out life insurance.
They can also be reduced by making gifts or selling stock to family
members over time. The business owner will often have a mix of
personal assets and business assets that need to be divided amongst
family members on his/her death. To help those who take over the
business, it is better to ensure that the business successors inherit
the business stock and other family members inherit personal assets.
This will stop future interference from family members who have no
interest in the business.

A framework should be put in place to allow the business to expand.
Failure in a second generation business can be attributed to lack of
growth. With a first generation business there is only one family that
needs to be supported, however a second generation family business may
have for example four families that need to be supported. The business
therefore needs to grow enough to provide sufficient income.

Succession will not always be the best solution. An alternative option
would be to sell the business. This can allow individual family
members to pursue their own goals instead of those of the former
owner’s.

The fact that you had a hand in starting the business puts you at an
advantage however the issue that you describe about your father's
micro-management will need to be addressed. Such issues are often
better discussed in the presence of a third party. A professional
mediator is probably the best solution. The link to the case study
where a mediator was used illustrates how this service can work to
solve disputes.>


<Additional links:>


<Family business – the top 10 issues.>
<http://www.aicpa.org/pubs/jofa/jul2002/scott.htm>

<Shareholder agreement.>
<http://pervinfamilybusiness.com/gcarticle_001.html>

<Family business magazine.>
<http://www.familybusinessmagazine.com/>

<Center for family-owned business.>
<http://www.cfob.com/busserv.htm>

Case study – mediation used to settle a family business dispute.
<http://www.outofcourtsolutions.com/lit4.htm>

<Case study – how a third generation business owner turned around the
family business.>
<http://www.startupjournal.com/columnists/casestudy/20020827-casestudy.html>

<Case studies.>
<http://www.pervinfamilybusiness.com/case.html>

<Business succession – legal planning.>
<http://www.njlawnet.com/njlawreview/businesssuccession.html>

<Start the succession preparation process early.>
<http://www.bizjournals.com/extraedge/consultants/family_business/2002/10/28/column147.html>

<Legal planning.>
<http://www.office.com/syb_legalplanning.htm>

<Passing family owned businesses to relatives.>
<http://www.alaska.net/~pradell/Information/PassingBusinesses.html>

<Keeping it in the family.>
<http://www.pullcom.com/docs/Succession.pdf>

<Planning a career change.>
<http://www.askmen.com/money/career/38_career.html>

<Is continuing education for you?>
<http://www.careerexplorer.net/articles/continuinged.asp>

<8 ways to love the job you have.>
<http://www.ivillage.com/work/job/succeed/articles/0,10109,165446_416445,00.html>

Are you a natural entrepreneur?>
<http://www.4hb.com/0830bcttakethequiz1.html>



Search strategy:

<"family business" "case study">
<://www.google.com/search?q=%22family+business%22+%22case+study%22&hl=en&lr=&ie=UTF-8&start=20&sa=N>

"family business" "legal planning"
<://www.google.com/search?q=%22family+business%22+%22legal+planning%22&hl=en&lr=&ie=UTF-8&start=10&sa=N>

<Hope this helps.>

Thank you for the statistics and numerous references. This was
surprisingly more informative then I expected and fast. I will
continue to challenge the Google team with more thought provoking
questions.

From your description it sounds like you'd like to go into the family
business.
Working with relatives can be a problem but not an insurmountable one.
 A good contract and job description can help a great deal as can a
trusted third party mediator of sorts -- perhaps an attorney or
accountant.
There is no greater challenge or satisfaction than building your own
business and having to truly earn your own salary.
I'm writing from the "been there, done that angle."  

I think if you were to read your own description of the family
business and your feelings for it, you might answer your own question.

I'm sure a researcher will supply you with documentation, but it's
your life and your happiness.

Good luck.

Nellie Bly