Tag: entrepreneurial couples

By Kathy J. Marshack, Ph.D., P.S.

Jay was 28 when he founded his sign business. He and his wife Teddie were thrilled when they opened their storefront. As a young couple, they had a lot of energy and worked long hours getting the office and shop ready, buying supplies, developing a business plan, joining the local chamber and greeting their first customers.

Jay took over full management of the operation while Teddie kept her full time job as an account executive for a women’s fashion company. But Teddie was there through all of the growing pains of the business too. She helped with billing and emptied the trash. She took messages for Jay at home in the evening when he was working late. The goal was to build the business to a level where she would quit her job and come to work with Jay. In the meantime her job provided a steady paycheck and other benefits such as insurance.

As the business grew, so did Jay and Teddie’s family and responsibilities. By the time their second daughter was born, the sign business was doing well enough to support the young family without Teddie’s income. It would be tight, but the couple decided to take the plunge. Teddie quit her job to have the flexibility to care for her children and help out at the business.

For years Jay and Teddie ran the business this way. Although they shared equally in the ownership of the business and both worked long hours, Jay was really the manager and Teddie the home manager. Teddie would leave early to pick the kids up from school and get them to soccer practice. On some mornings she would come in late to the office because there was a dental appointment or a school field trip. At the office, however, she was fully in charge of her department . . . everything that Jay didn’t do, such as the bookkeeping, billing, purchasing and replanting the flowerbeds by the front door. Jay did the management, hiring and firing, marketing, customer service and the technical work. Amid all of this the children got more involved with the business, at first just watching dad build a sign, and later learning complex computer work.

If you are typical of most family business owners, you could probably plug your names into this scenario and change only a few details to make it your own story. Likewise, if you are typical of most small business owners, you do not have a succession plan. You have been so busy establishing and growing your business that you haven’t looked that far ahead. You may not even have the confidence yet that your business will be around that long. Or you may decide to sell the business and build several other empires before you retire or die. When you were getting your business underway, it never occurred to you that you were building a legacy; you were just going after your dream.

If you are among the rare few who have considered succession planning, more than likely you and your spouse have discussed which child is best suited to be president or if management responsibilities should be shared by siblings. If you are in partnership with your brother, mother, sister-in-law, or some other family member, you probably have a legal and financial plan for how the partnership will transition should one or the other of you die or wish to be bought out. However, if the family business is a sole proprietorship such as Jay and Teddie have, and the husband is the founder and president, it’s highly unlikely that you have considered your wife as a successor to the business leadership. Yet it is the wife who is most likely to be thrown into that position with the death of the founder where no succession plan has been established.

In 1984 McKinley conducted an interesting study in which she found that a widow was more than willing to take over management of the business upon her husband’s death, especially if she had been working with her husband. But even among those widows not working in the business side-by-side with their husbands, there was a strong desire to take over the management. These widows reported that the business was very meaningful to them that it was a part of their identity, that they had psychologically helped build the business. They did not want the business to pass out of their hands, even if they didn’t know how to run it.

Furthermore, most of the widows studied did not know how to manage their husband’s business, because they had not been trained. Their function had been auxiliary. They provided support such as Teddie has done for Jay. Therefore, these widows, untrained in the ins and outs of managing the family business, had to turn to their attorneys, CPAs and other advisors to educate themselves about the business. This is not sufficient training for the complexity of running a small business, as any business owner knows. But these particular women were determined and they learned as their husbands had done . . .by the seat of their pants.

This seat-of-the-pants training may have been sufficient for the founder, but it seems a waste to have the successor not benefit by her predecessor’s lessons. Unless the business is a professional practice requiring college and certification that your wife could not readily get upon your death, preparing your wife to take over the business is a logical and practical step for most business owners. A side benefit is that once she is trained, the founder can turn his interests elsewhere, such as expansion or developing a second business entity. Growth of an empire is possible only when you have the flexibility and freedom to explore uncharted territory. If you are busy manning the helm, your growth will be limited to raising prices on product or adding a new line.

Preparing a wife for the presidency is no easy feat, however. It means acknowledging that the founder may die or wish to move onto something else. It means putting things into writing, such as compensation plans for your wife. It means letting go of control and allowing your wife to know all of the company secrets. It means that the marriage itself will be challenged. As the protégé grows in ability and leadership, the mentor may find himself eased out of power before he is ready. Can your marriage stand the strain of your wife being the boss, for example?

Making your wife your equal partner at work (provided she wants the job) and teaching her everything you know, will provide a solid succession plan. She will most likely be a devoted fan of yours and the business, and therefore a loyal and responsible guardian for the business. She will be a much better prepared widow than McKinley found in her study and less likely to lose the business. However, this also means redesigning the business today to accommodate two owners, two managers, two leaders. The consensus model of marriage that most Americans accept as the standard today will be brought into the business setting. Not only will husband and wife have to adjust to this change, but so will employees, customers and others used to a more hierarchical model.

Be prepared to change the structure of management when your wife becomes your management partner. No longer can the founder fly by the seat of his pants. Although you may feel that your style is cramped when there are two of you to answer to, remember that having a well trained successor (and one who loves you) means that the business has a much more bright and stable future.

By Kathy J. Marshack, Ph.D., P.S.

“It’ll just make things worse if I tell him.”

Janice was getting more and more anxious as the days and weeks went by. The bills were mounting, the creditors were calling, the first bank note was due in one month, and sales were miserable. Janice and her husband had just begun a business expansion that they had dreamed and planned for over the last five years. They were positive it was a winner and were thrilled when the bank backed them up. While Cary blazed ahead with building, hiring, warehousing and so forth, Janice as CFO handled the creative financing.

Unfortunately Janice was just a little too creative with the financing. Because the dream was too important she stretched things further than they could be stretched. Cary never questioned his wife and was unaware that they were heading for financial disaster. Janice on the other hand kept trying to pull a rabbit out of the hat.

When Janice first discovered her miscalculations, she was mortified. She was too embarrassed to tell Cary, so instead tried to solve the problem on her own. As the financial problems increased, she started shifting money from one account to another, staying one step ahead of her creditors. She convinced herself that Cary was too busy with the project to be bothered by the financial problems. She rationalized that these problems were temporary because any day now she would find a solution. Janice loved her husband and didn’t want to disappoint him either. She felt he would be crushed to discover that not only would he have to halt the expansion, but that the entire business might go under. So she lied and she hid the truth in a variety of ways.

Since Cary was not very computer literate and left all of the number crunching to his wife, the secret was not hard to keep. Until of course, the bank called the loan. Then Cary and Janice had two problems to face. The financial woes were their immediate focus so as business partners they busied themselves untangling the mess that Janice had concealed. But as the dust settled from the financial nightmare, husband and wife had a to face a more serious crisis . . . how to restore the broken trust between them.

“What they don’t know won’t hurt them.”

Even a surprise birthday party may be a secret not worth keeping, if the guest of honor doesn’t like them. It is rare that secrets are a good idea and yet they are commonplace in family firms. The major reasons for keeping secrets are (1) to avoid disagreement and confrontation, (2) to protect someone from hurt feelings or even physical distress, (3) fear of punishment or embarassment for a wrong doing, (4) or just because you made a promise not to tell.

Why are secrets so bad if they don’t hurt anyone? This is usually a rationalization. If you have to keep a secret, then it obviously affects other people. The content of the secret may or may not affect the other person adversely, but the question is, will keeping the secret affect the other person adversely? As we saw with Janice and Cary both the secret and keeping it powerfully affected the business and the relationship. There is no telling whether the couple could have saved their business had Cary known earlier of the miscalculations. However, by keeping the secret long after she should have told Cary, Janice seriously damaged the trust and the love between the two.

“But he’ll get mad at me if I tell him the truth!”

No one likes an argument but it is foolish to think that you can go through life, build a marriage and a business without having disagreements. As compatible as family members may be, they are bound to disagree on some things and sometimes these disagreements escalate into angry confrontations. Therefore it is useful to develop conflict resolution skills, rather than avoid the anger.

The excuse that the other person will get mad if you level with him or her is a poor one. First, you never know if he or she will get mad. Second, even if he or she does get mad, the discussion doesn’t have to end. Be brave and venture into conflict resolution. Third, the person may have every right to be upset that you withheld information (or fibbed) that affects his or her life. Think about it. How do you feel when a secret is kept from you, especially if your decisions depend upon the hidden information?

“It would be mean to be honest.”

There is often the fear that you will hurt someone’s feelings if you tell the truth, or worse that they will have a heart attack and die. The problem is that you have no right to assume responsibility for the other person’s life or life decisions. When you keep a secret that affects the life of another, you are robbing them of the opportunity to take responsibility for their own destiny. Because Janice loved her husband, she wanted to insure the success of his dream. But by lying to Cary, she kept him ignorant of the information he needed to make a mid-course correction. He may still have failed had he known earlier what the financial picture looked like, but the success of the business and his own destiny would have been in his hands.

Essentially it is disrespectful to keep secrets. You are treating the other person as if they are incompetent to handle the truth. What makes you better able to handle the truth than the other person? Sometimes the truth hurts. Sometimes it is embarrassing. Sometimes the truth is a powerful leveler without which you would never know you are in over your head. When I received the phone call telling me that my ten-year-old daughter had just missed the cut for the soccer team, I had to tell her the truth. Not only had she failed to make the team, but that she wasn’t quite good enough to play with this team. She cried and sobbed and was heartbroken over the failure. She even refused to eat dinner and went to bed early. However, the next day she obviously had learned an important lesson. She asked for new shinguards and went to the backyard to practice for next year’s tryouts.

“I won’t tell you unless you promise to keep it a secret.”

Signs of maturity are honesty and reliability. When we give our word, we feel a strong compulsion to keep it, to be consistent with our image of an honest and reliable person. However, it is important to realize that promising to keep a secret is not a demonstration of maturity, but actually quite childish. As a businessperson, your success depends upon flexibility. Decisions made in 1982, while accurate at the time may no longer fit the business in the year 2000. You would be foolish to hold to old decisions just because you once made a promise. You are just as foolish to keep a secret just because you want to maintain an image of consistency.

Emerson once wrote, “foolish consistency is the hobgoblin of little minds.” To make a promise to keep a secret in the first place is foolish, but you double your foolishness by keeping the secret when the evidence shows how damaging it can be. To cover for an alcoholic in the family business brings destruction on everyone. To withhold information from your spouse because one of the children has asked you is disrespectful of your spouse and the child’s ability to handle the problem out in the open.

Oh what a tangled web we weave . . .

There may be short-term gain in keeping secrets, but the long-term outcome is not worth the risk, especially when working with the ones you love. Openness in all things is the answer, even if it is embarrassing, anger-provoking, or hurtful. Don’t keep secrets, but if you already have, break them. Admit your failure, apologize to those you have lied to and make a promise you can live with. That is, promise to be responsible for your own actions, and allow others access to their own destiny through the truth.

Kathy J. Marshack, Ph.D., P.S. Licensed Psychologist and Family/Business Consultant is the author of ENTREPRENEUERIAL COUPLES: Making It Work at Work and at Home (Davies-Black, Palo Alto, 1998). She can be reached at (360) 256-0448 or www.kmarshack.com.