‘Free Lunch’ of Seasoned Advice

Q: We have owned and run a small business since 1999. In 2005, we purchased a store that had been in business for 30 years. The store’s records showed it was thriving. We should have had an attorney look at the records before we purchased it, but we didn’t, and it has cost us money ever since.

We also have suffered losses from the fires and rain in our area, and we have been struggling to maintain the business. We feel we have put too much money into it to just walk away, plus we still owe money on it. What can we do now?

A: Knowing whether to buy a business, how much to put into it, when to sell it, and when to walk away after losing too much requires expert financial forecasting and business acumen in that specific business field. Now that you are tight on funds, you probably can’t afford to hire the level of expertise you need to make that determination.

Contact SCORE, "Counselors to America’s Small Business," to work with one of its 12,400 volunteer counselors. Many of the counselors are successful business owners and consultants who want to share their knowledge to help others succeed in starting and owning small businesses. SCORE helps entrepreneurs and small-business owners through its counseling and business workshops in 364 chapters across the country.

If you go to score.org, you can begin with ‘Small Business Smart Start Tools,’ where you can learn about quick-start business plans, startup quizzes, and workshops that cover starting, managing and marketing a business, as well as tax issues, financial management and technology. If you live near one of the chapters, you can meet with counselors for no charge. The SCORE website also offers more than 1200 online mentors by industry under ‘Ask SCORE.’

Although you bought your store in 2005, you likely would benefit from learning the basics all the way up to successfully maintaining a business. Once you gain this knowledge, you then will be able to decide what to do with your business. Hiring corporate attorneys and certified public accountants to tell you what to do may seem like an easier way out of your dilemma, but you could face a new set of problems if you have to rely solely on others for reliable business decisions.

Family-Owned Business Comes with Baggage

Q: My husband and I started a small business years ago. We have been modestly successful and employ several family members, along with a number of non-family employees. Normal family baggage conflicts have become part of our business, and correcting these family members and supervising them is difficult if we don’t want it to affect our family relationships outside the business.

We also face the issue of non-family employees feeling they are not receiving the rewards that family members receive. In some cases, it’s true; in other cases, it’s not true. We also have a rivalry going on among family members who do not work for us. I regret hiring some of these family members, but my husband doesn’t see the problem. What suggestions do you have for family business owners?

A: Unfortunately, you may be in too deep to correct all the problems without fallout. In numerous cases, the words ‘family business’ mean ‘trouble’ because people forgo the employment contracts thinking that the business is too small and too casual to bother about formal conventions and that family always can be trusted. Not true.

Successful business partnerships are based on the sharing of similar core values, not on blood or genetics. Because you and your husband are not wealthy enough to become all your family members’ benefactors, convince your husband that these problems must be addressed. The two of you must be on the same side before you take action, and your husband would be wise to listen to you.

The first problem is an easy fix: You must treat people fairly. That means family members who are employees, not partners, should be treated as employees. This would reduce the family rivalry from members not in your business, as they are probably jealous of those getting a free ride. It also would boost the morale of your non-family member employees, as they would see that hard work pays off. Then go even further. Reward the employees who make your business a success. Acknowledge their good work ethics and high performance levels with cash incentives, extra benefits, bonuses and even periodic gift certificates as thanks for jobs well done.

The final cleanup is ridding your company of the metaphoric ‘dead wood.’ Keeping workers, family members or not, who do not earn their wages is not only bad business but also a morale killer. Ask yourself how hard you would work if you watched your co-worker get paid for doing little to nothing. If your husband objects to firing family members who do not display solid work ethics, your business may not be successful for much longer, not in this economy.