Assignment:
Q1) Name one advantage and one disadvantage of starting a new business which are best illustrated in the article. Use an example from the article to support your answer.
Q2) Which one of the twelve indicators for increasing the chance of start-up success is best illustrated in the article? Explain why.
The article:
Call it the ultimate test of the parent-child relationship: going into business together.
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.
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.
Below are the stories of three sets of parent-child partners, all of whom say they are successfully navigating the potential pitfalls of being in business together. We'll take a look at how each partnership formed -- and how they're making it work.
Mother:
Trish Cooper
Daughter:
Carrie Schwinof
Zatswho LLC
In early 2009, Trish Cooper of Hope, N.J., became a recession statistic: She lost her job and joined the ranks of the unemployed.
Ms. Cooper, now 52, had spent the past 13 years working as chief financial officer for a small telecommunications company. "When the day came, I was devastated," she says. "You feel like you're something, then you're nothing."
Although Ms. Cooper sent out resumes, she wasn't optimistic about landing a new job because of the economy and her age. She comforted herself by spending time with her 8-month-old granddaughter, Gianna, teaching her who was who in the family through photographs. "And she was destroying my photos," recalls Ms. Cooper, who decided to laminate the pictures.
That's when inspiration struck. Why not create a learning tool for toddlers, where parents could slide photos into protective cases and use them as flashcards? Ms. Cooper made some prototypes, using nontoxic foam in a variety of colors, with a tote-bag carrying case. Then she hired a service that evaluates the feasibility of new products.
"I learned there were no products on the market like that," Ms. Cooper says.
Ms. Cooper realized she had an obvious business partner: her daughter, Carrie Schwinof, who was already giving her feedback about the cards. Ms. Cooper knew she would need help with the venture, particularly in producing the initial batch of sets, so she approached her daughter with the idea.
"At that point, she was a stay-at-home mom," Ms. Cooper says. "I said, 'Look, you are not going to have another opportunity like this to be an owner.' "
Ms. Schwinof, now 27, agreed. It seemed like a great chance, especially since her husband often works "crazy" hours in construction. "I would love to have a family business, where we could eventually all work together, and improve our lifestyle," she says.
Just as important, the two women had a solid relationship. "My mother and I have always been really close," Ms. Schwinof says. "She's my best friend, my partner in crime."
The first order of business: dividing up the work. Ms. Schwinof was busy at home, so she couldn't devote lots of time to the enterprise. And Ms. Cooper -- both women agree -- has a take-charge personality.
So, Ms. Cooper steers the company and makes the majority of business decisions, as well as doing most of the marketing and PR. She's also majority owner, but the two women have agreed to become equal partners after Ms. Cooper recoups her $30,000 start-up investment and the company becomes more successful.
Meanwhile, Ms. Schwinof, a former waitress who has an associate's degree in marketing, makes marketing and sales calls and handles Zatswho's social-media efforts. As her mother admits: "Tweeting wasn't something I could wrap my head around."
Ms. Cooper says one of her biggest concerns is that outsiders won't realize how big a role her daughter plays. The two talk business about 15 times a day, and attend trade shows and make sales calls together, often with Gianna, who's now two years old, in tow.
"I don't want people to think, 'Mom's doing all this,' " Ms. Cooper says. "That's not fair to her."
Ms. Schwinof says she's happy to let Mom be the frontwoman. "I am OK to be behind the scenes," she says. "I don't need the recognition of others."
Still, things can get tough when they have opposing points of view. For instance, Ms. Schwinof didn't like how her mother constantly referred to the products as "tactile," even including that wording on the packaging. "She said, 'Mom, why don't you say pliable or sensory -- people get that more,' " says Ms. Cooper. They changed the packaging wording to "soft" and "easy to hold."
"Because I am the mother and she is the daughter, [my] natural feeling might be: 'I know better because I am more experienced,' " Ms. Cooper says. But "I have to listen to her point of view." She adds, "We are both learning it takes discipline and respect to make this work."
Ms. Schwinof says of her mother, "She's demanding, but I get it, and I don't take offense."
What's next for the team? A wider scope. The two women put together about 500 sets of cards themselves, and sold them all. Now they're working with a U.S.-based company that has manufacturing facilities in China to mass-produce the product, which sells for $15.95 a set in stores in seven states. The women are currently awaiting their first mass shipment of 6,000 sets.
Ms Cooper hopes to be profitable by 2012, if not before. But that isn't the only goal. "It's about the love of your family, and spending time staying connected," Ms. Cooper says.
Son:
Arian Mahmoodi
Father:
Farzad Mahmoodi
SellYourOldiPhone.com
Arian Mahmoodi always respected his dad, Farzad Mahmoodi, and turned to him for odd bits of business advice about running his first start-up. But when Arian launched a new business, he quickly realized he'd need much more hands-on help from his father.
It all began three years ago -- when Arian was all of 14 years old. He wanted to get rid of his old Nintendo Game Boy games, so he put them up for sale on Amazon.com. They moved so quickly that he began buying collections of games and selling each one individually.
He managed all the transactions and cash flow of the business from his home in Hannawa Falls, N.Y., and relied on his parents only to drive him to the post office to mail the goods.
"I learned time-management skills," say Arian, now 17, who is president of his senior class, the student council and his school's chapter of the National Honor Society. "I'd wake up and package the orders in the morning before school."
But he had bigger dreams, and decided to use his profits to launch SellYourOldiPhone.com, which went live in August 2009. Through the site, Arian buys used and often broken iPhones, which he then gets refurbished and sells back on the open market. He started tentatively, by buying a few phones and sending them to refurbishing companies that he found online.
After he sent the first mass email blast advertising the company, hundreds of inquires poured in, he says. "It wasn't something I could do on my own," Arian recalls.
Mr. Mahmoodi, 49, a professor who teaches supply-chain management at Clarkson University in Potsdam, N.Y., was happy to help his son get organized. Together, they started tracking the orders, organizing them by iPhone model, and tracking the customers by assigning each a unique number.
"He's always been inquisitive, particularly when it has to do with business and management," says the elder Mahmoodi. "That's a nice match for me."
The business had so much success that Arian replicated the model a year later for SellYourOldMacBook.com. By then, Arian and Farzad had established very distinct roles. Arian, the chief executive and face of the company, manages all the inquiries that come through the website and all other customer-service matters. He's also responsible for advertising and pricing the goods.
Farzad handles all the accounting and legal matters, and has stepped in to co-sign documents, such as a debit-card application, that Arian can't sign alone on account of his age. He also manages the supply-chain activities -- such as monitoring the flow of broken inventory as it ships to and from the technicians -- and figures out which international markets the company should focus on.
"My job is to come up with strategies," says Farzad, who notes that while his students don't always take his suggestions, Arian always does.
The father-son team buys and sells about 20 to 30 devices each week. Since launching, Arian says he has brought in $230,000 in sales, primarily over the past year. He reinvests the money into the business, by buying more phones and computers. Farzad doesn't take a salary, but he doesn't mind, he says, because the company is like a free lab where he can test-run supply-chain ideas.
Arian and Farzad anticipate that the company will continue next year, while Arian is getting his college degree, but that they will likely have to hire an employee to take over some daily operations.
Both Arian and Farzad say they get along very well, but they have stepped on each other's toes at times. Over the summer, for example, while at Cornell University for a three-week academic program, Arian spotted a great deal on accessories, like chargers and phone cases. He placed a large order without telling Farzad.
"I got a call, my dad asking, 'What is this? We have all these boxes -- is there a mistake in the order?' " Arian recalls. "He wasn't too happy because he couldn't park in the garage."
The miscommunication didn't hurt the business, but it does exemplify a larger problem: Arian has a desire to advertise more, buy aggressively and grow rapidly. Farzad is discouraging him from doing that, so that his son can instead focus on fun activities before he heads off to college.
"I constantly hold him back," Farzad says. "He is always trying to do more and learn new things. He challenges me, he drives me."
For now, Arian says he's taking his father's advice. "We're in agreement at this time to keep it as is," he says. "We need to agree on when to expand."
Daughter:
Lauren Russell
Father:
Larry Strassner
Russell & MacKenna Inc.
When Lauren Russell decided to launch a furniture business, her first instinct was to turn to her father, Larry Strassner, for guidance. But within a few months, he became much more than a helping hand -- and now, seven years later, the father and daughter co-own Russell & MacKenna Inc., which has grown to more than $1 million in annual revenue.
Ms. Russell says the idea for the business came about while she was running a solo marketing consultancy out of her home. A visiting client made an unusual request: a replica of a nautical-themed vanity that Ms. Russell had designed and her husband, Kevin, had built for their home. The couple fulfilled the request, and the client then ordered several beds and dressers in the same style.
Ms. Russell says the affair inspired her to try and build a business out of her designs. But there was one problem: "Neither of us had any business experience," says Ms. Russell of herself and her husband. "I knew really quickly to make it work we were going to need some help."
Ms. Russell, now 38 years old, says she sought her father's support because she knew he was up to the task and had time to spare. Mr. Strassner, 68, had just retired after serving as chief executive officer of a publicly traded staffing company.
Ms. Russell felt fine asking for help, because she had a great relationship with her dad. Mr. Strassner says he was happy to assist and agreed to spend the next three weeks at his daughter's home in Severna Park, Md. But as the fledgling company evolved, thanks in large part to some coverage in a home-decorating magazine, Mr. Strassner decided to rent a carriage house in the area so he could help out for even longer.
"He was still thinking it was a temporary thing," says Ms. Russell, who now counts her father as a permanent neighbor.
At the start, Ms. Russell handled sales and marketing, Kevin built the furniture, and Mr. Strassner did all the accounting; Ms. Russell and her dad worked together on strategic planning and managing day-to-day operations.
Soon Russell & MacKenna Inc. relocated to a warehouse with office space in Jessup, Md., from Ms. Russell's home. The company hired laborers to assemble the growing volume of orders it was receiving through its website. And Mr. Russell focused on caring for the couple's three young daughters. ("MacKenna" is one girl's middle name.)
When the company reached the one-year mark, Ms. Russell says she and her father created a formal business plan, including estimated monthly expenditures, sales projections and long-term goals. Later, they agreed to evenly divide more than half the equity in the business among each other and Ms. Russell's husband, who became a silent partner. They doled out the remainder to 12 shareholders they recruited.
"I don't see any downsides," says Mr. Strassner of being in business with his daughter, adding that she taught him how to use email and better navigate the Web. "When she was growing up, she didn't have as much of my time as she should have, and now I'm making up for that."
But Ms. Russell says the father-daughter dynamic could be off-putting for employees -- the company now has seven -- which is why early on she decided to call her father by his first name at the office.
"I was uncomfortable saying 'Dad' around clients or investors," Ms. Russell says. "It didn't seem very professional."
Overall, Ms. Russell says the dynamic works because she and her father are family -- and they have a similar temperament. They talk business all the time, even at Thanksgiving dinner.
"There really is no off switch," Ms. Russell says. "We're workaholics. When we're around other members of the family, they probably do get sick of it."