Family Business Advice

Owning and operating a small family business – whether you are a business founder or part of the next generation to operate the business – is very different from running a small business with people who aren’t family members. We asked two of our clients to share their thoughts and advice related to the family business experience. One is part of a multi-generational family business and the other has been in business with her husband for over 20 years.

MARTY SANCHEZ, third generation of Casa Sanchez

As a part of the third generation of a successful San Francisco Bay Area family business, Marty understand the dynamics of multi-generation family businesses and shares this advice:

On playing to your your strengths

In every family business, each person has a strength that really helps the family – it could be related to sales, bookkeeping, organization, etc. Learn who you are and figure out your strengths. Engage in the parts of the business that you are good at and where you can make a difference.

On communication and compromise

With family, you sometimes speak without thinking first. Nagging is a common way of communicating in family businesses. This is not the best way to communicate, but it can be effective! You must not forget that the strength of the relationships is the strength of the business. Family business means compromise. This goes for out-laws (in-laws), too, who may not fully understand the family dynamics and have their own ideas for the business.

On personal vs. business time

One holiday many years ago when the family was together, we couldn’t stop talking about the business. Someone said, ‘Let’s not talk about business at all on Thanksgiving and Christmas’… and we’ve stuck to it! This makes holiday time extra special.

On growing up in a family business

Kids get involved with a family business organically. They hang out at the business after school every day and start to help out. They learn about it without even knowing it. It’s ‘Take Your Kid to Work Day’ every day! As kids get older, they can feel obligated to help their parents, siblings or other family members. Guilt can play a large role as they don’t want to abandon the family. We need to be sensitive to these feelings and make sure that those in the next generation feel comfortable talking to someone in the family about the business and their role in it.

On compensating family members

There needs to be a clear understanding about how compensation is handled for family members and how pay and raises are calculated. Imbalances in pay or a lack of clarity lead to resentment. Create clear compensation rules that are related to roles, tasks, hours worked, etc. and put it in writing.

On getting outside support

When an issue comes up, it can be hard to talk about it openly, and in a way that leads to resolution. A family member may be unhappy but may not feel comfortable talking about it. It has been really helpful for us to meet with a mediator to discuss issues, find ways to compromise, and move forward.

On family pride

People love to support family businesses and they love to hear that I am the third-generation in our family business. Customers recognize the commitment, passion, dedication and hard work and want to support us. I’m very proud to be a part of a family-owned business.

DEBORAH BOWES, co-owner of Feldenkrais Center for Movement & Awareness

Deborah has co-owned Feldenkrais Center for Movement & Awareness with her husband, Cliff Smyth, since 1996. Here are her tips for other businesses owned and operated with a life partner:

On communication, compromise and sharing the load

  • Agree on the steps to take next. Be willing to compromise and sometimes follow your partner’s dream.
  • Share the stress. Be attentive to when your partner needs a break and give it to him/her.
  • Be honest with what you want to do and the kind of support that you need.
  • Allow each other to work from his/her strengths.
  • Give a lot of support when your partner is doing something the he/she doesn’t like to do or doesn’t want to do. After all, there’s always going to be some of that!
  • Make specific times for work meetings and take notes. It’s so easy to forget who agreed to what.

On managing conflict

  • Don’t talk about work before going to bed.
  • Go for walks to talk out difficult issues.
  • When you both are around your employees, be professional with each other.
  • Keep any private issues at home.

On work/life balance

  • Home support is essential. Share tasks related to cooking and cleaning, and use a housecleaner if that is helpful.
  • We get grouchy if we have worked all day, come home hungry and there’s nothing to eat in the house. Have food in the freezer ready for a quick meal or get take out once a week.
  • Your business depends on your own self care and health. It is as important as everything else you do. Stay hydrated and try to fit some type of movement or exercise into your day.
  • Laugh together and relax together.

Deborah’s last words of advice are applicable to ALL of us – “Be the kind of boss you’d want to have and the kind of employee you’d value!”

At Paul Terry & Associates, we are familiar with the challenges specific to family business owners and joint ventures. We help new joint ventures define the terms of their relationship and established partners address current issues and update agreements. Learn more about our services.

Check out these tips and resources for family-owned businesses.

Operating a family-owned business

At Paul Terry & Associates, we understand family-owned business dynamics. Paul worked for his father’s sawmill manufacturing business while in high school and college, and his first two businesses in San Francisco were partnerships with a married couple. Today Paul’s daughter Jenny is a part of the Paul Terry & Associates team, when she’s not running her family farm with her husband.

family-owned business

We know that owning and operating a business with family can have a lot of advantages, especially related to trust and a joint commitment to the enterprise. This is often essential in the early stages as the business is getting off the ground. Everyone in the business is driven by their passion for creating the product or providing the service.  But once the “honeymoon” stage is over, things can get more challenging and complicated, as additional business skills are required. Careful attention must be given to operating the business and relating to one another as business partners and not just family members.

Roles and responsibilities

Every business needs clearly defined roles and responsibilities for the people associated with the business. This is especially important when the owners or the employees are family members. With a family business, every issue affecting your business relationship could easily spill over into your personal life. It is essential to:

  • Create job descriptions outlining each person’s role and specific responsibilities, and revise when necessary.
  • Set regular meetings (monthly/quarterly) to discuss tasks, responsibilities and how decisions are made.
  • Confirm that employees who aren’t part of the family know how to deal with the family lines of authority.


When you have a personal and a business relationship with someone, communication requires extra care. It can be easy to be critical with a relative in ways that you never would be with a non-family member colleague. You probably know how to push his/her buttons! Simple rules of good communication must still apply.

  • Address issues as they surface in a respectful, honest and open way.
  • Approach your interactions from a place of respect and trust.
  • Refrain from talking about personal issues during work time, especially when around people who aren’t family members.
  • Spend time with your family members when you don’t talk about the business.
  • When needed, bring in an outside mediator to help resolve the issues that you can’t fix alone.
  • Use an experienced business advisor to help build your management skills.

Governing structure

Just like any other business with more than one owner, it is very important to have written agreements. This can include both the governing and operating structure of the business as well as the roles and responsibilities of each owner, particularly related to decision-making. Everything may be working fine… until it isn’t. For a family business, it is very important to consider these questions:

  • How will family partners evaluate each others’ work? Will there be performance reviews?
  • How will family partners be compensated? Does everyone make the same amount?
  • What happens to profits from the business and how are they divided?
  • What happens when one partner no longer want to own/run the business? Who gets the first right of refusal?
  • What is the policy for bringing other family members into the business?

Like all joint ventures, every family-owned business needs an ownership operating agreement in writing. This agreement should include an operating agreement as well as a succession or exit plan to protect both the business and the personal relationship of the owners.

Getting support

It is tempting to try and “go it alone” and take care of issues within the family instead of discussing your problems with outsiders. But outside support – whether from a trusted business advisor or another family-owned business – can bring different perspectives and solutions. An advisor or mediator can help you address underlying issues that may be difficult to bring up or handle without support. They can also help you implement and maintain better business systems and make adjustments as needed.

Here are local resources for family businesses:

Gellert Family Business Resource Center
This University of San Francisco center provides family-owned businesses with access to networking and practical family business information, and helps promote next-generation leadership.

Family Business Strategies Summit
The San Francisco Business Times sponsors an annual breakfast and conversation with family business owners every year. Family-owned businesses share some of the common challenges they face, as well as strategies and best practices for effectively managing and growing a family business.

 Check out our services to see how Paul Terry & Associates helps family businesses and other joint ventures and business partnerships to launch and grow, as well as plan for transition or succession.

Managing my business in partnership

The first business I owned in San Francisco was a gourmet cheese shop, called Cheshire Cheese, located in the Fillmore District. In a previous blog post I shared how my business partner, Michael, and I decided to go into business together and start Cheshire Cheese. Here’s the story of how we managed and expanded our business partnership.

Seize the opportunities

Six months after we opened Cheshire Cheese, the retail space next door became available for lease and the primary lessee offered us the master lease. (He also gave us his Pacific Heights mailing list and all his demographic studies on the neighborhood!)  We discovered that our sublease was already 75% of the master lease so we jumped at the chance to take over the entire lease.  We successfully negotiated a new 10-year lease with the building owner.  Now we could double our size with the security of a long-term lease.

With limited capital to cover the expansion, Michael and I created a new partnership.  We found two women who could bring new strengths and additional capital to the business.  Tara was a graphic designer and display expert and Lynn was experienced with HR and motivating employees.

With the new next-door location, we added a small café and expanded our identity.  Cheshire Cheese became Cheshire Cheese & Mad Hatter Tea.  With the infusion of additional capital, we could now afford to hire more part-time employees.


Communicate openly

We were now four owners who each brought different skills-sets and personalities to the business.  We had our differences but we were in agreement where it mattered most: our vision for the business, the impact we wanted to have in the community and, most importantly, how we would manage the business together.

We decided on a consensus-driven approach to management.  (An early philosophical decision was to continue only offering vegetarian items and to not expand into wine sales.)  We created a written agreement that reflected our values and our equal ownership.

We held “official” business meetings every Wednesday after the store closed.  We used this time to plan work schedules, discuss personnel, review financial statements, prepare for holiday celebrations, and eat all the free samples that new vendors would drop off for us to taste.  Transparency and honesty was essential for us, so we made sure we talked about money — how we were doing both by the day, the month and based on our annual budget.

Build on lessons learned

Every day was a team learning experience.  We learned about the subtleties of food products, how to serve customers well, how to make strong relationships with vendors, and how to follow health department codes.  Through a lot of trial and error, we were also getting better at running the business profitably, managing it jointly, and working through management and personnel challenges along the way.  The best lessons learned were from hands-on experience.

Plan our exit

After running the business together for five years, two of the partners wanted to move on – one to another business and the other to go back to school.  We all decided we would sell the business.  To get ready to sell, we had to learn how to value our business as an asset, organize our internal systems, leverage our long-term lease, and negotiate with potential buyers.  After several months of planning and negotiation, we successfully sold the business to new owners!  (Cheshire Cheese & Mad Hatter Tea continued to operate for 15 more years.)

Business partnership means attending to both the business and the relationship

Like a business with one owner, a  business with multiple owners must be based on a viable business concept and a solid plan for marketing, money and management.  Unlike a business with just one owner, co-owners must be constantly attuned to the needs of both the business and the owner relationship(s).

Starting off, Michael, Tara, Lynn and I were aware of the qualities that each of us brought to the business – our personalities, passions, purpose, work styles and areas of expertise.  Once we were in business together, we had to pay attention to the dynamics between us — how well our individual strengths or weaknesses meshed, and how well we communicated and made decisions together.  Our written partnership agreement was key — both as a guide for managing the business and as a road map for how we would approach our business exit.

Owning a business with others took a lot of work!  But it was also incredibly rewarding.  With business partners, we didn’t have to tackle business challenges alone and we all got to share in the business’ success.

Are you starting a business in partnership or already managing a business in partnership? At Paul Terry & Associates we help both new and established business partners understand key business issues and how to work best together.  We help co-owners define roles, address key financial issues and minimize areas of conflict.  We also help business owners write partnership agreements and create business action plans so that they can move forward with clarity.

Partnership advice from small business owners

There are many factors that must be considered when operating a business with others.  We asked some of our clients to share their partnership advice for small business entrepreneurs who are considering business co-ownership.  Here’s what they had to say!

Jane Lin of Urban Field Studio

Partnership adviceJane and her business partners provide a full range of urban design services, including strategy, design, conceptual architecture, and urban design education and communications.

Why did you decide to go into business with other people?

Two or three is better than one!  It is good to share responsibility.  You can do more as a team.  And, it makes life outside of the business more flexible, since we can cover each other when we go on vacation.

What do you love about owning a business with others?

I really like collaborating with my partners.  I learn a lot from them.  They are not just business partners but mentors.  I feel that I contribute to something bigger than just myself when I work as a team.  We all contribute energy, knowledge, encouragement, skill, support, and friendship to each other.

What is most challenging about co-owning a business?

Distributing responsibilities is a challenge that requires daily tending.  But, that’s what running a business is all about!

How do you deal with this challenge?

TALK.  Say exactly what you feel and state what you want.  For tougher moments it’s good to have a third partner who can hear you both out.  And, when you don’t get your way, have a good attitude about getting what you desire next time and understanding that it’s for the long haul.

What advice would you give to entrepreneurs considering a business partnership?

Think of your potential business partner like a travel partner.  Use a similar filter as the one you apply when you are choosing a travel buddy.  This is a long journey.  You are going to get lost.  Can you handle being stuck somewhere with this person?  Will they help you figure out what you’re going to do next?  Will you choose the same path forward?

Write a partnership agreement.  The biggest deal of all is the partnership agreement.  It’s like wedding vows and a pre-nup (but not as romantic).  The value of your business is maintaining a strong relationship between you and your partner every day.  If that is strong, your relationship with your customers will also be strong.

What do you wish you had done differently?

There is not that much I would do differently, but I do need to remind myself to give props to my partners as much as possible.  I want to practice gratefulness in what they do everyday.  And, I want to make sure we are connected as much as reasonable.

Shamita Dhar of Coyote Coast Youth & Family Counseling

partnership adviceShamita and her business partners co-own a counseling business that provides therapeutic support services to teens and families experiencing emotional, behavioral and substance-related difficulties.

Why did you decide to go into business with other people?

Being a part of a team is extremely rewarding.  We each have important strengths, which compliment one another and support a balanced approach when making important business decisions.

What do you love about owning a business with others?

I like the security of knowing that if one of us is having an off day, there are two others dotting “I”s and crossing “T”s.  Building a business is filled with opportunities for both successes and failures.  It certainly feels better experiencing either case when one is not alone.

What is most challenging about co-owning a business?

It is inevitable that tension will build when one or more partners fails to pull their weight or during periods when a partner experiences a crisis of confidence or some ambivalence about the work.

How do you deal with these challenges?

With solid agreements, direct communication and healthy boundaries—without these, we can end up feeling misused and mistreated.  Fairness is essential for a working partnership.

What advice would you give to entrepreneurs considering a business partnership?

Talk through every possibility and establish a solid partnership agreement, no matter how close you may be.  In fact, the closer you are, it is even more imperative to outline clear and specific agreements about how to work within the partnership and exit the partnership.

Deborah Bowes of Feldenkrais Center for Movement Awareness

partnership advice
Deborah co-owns the longest established Feldenkrais Center in the Bay Area offering individual sessions, classes and related wellness services.

Deborah’s partnership advice for other small business owners:

Make a plan.  It is important to plan for the changes that the future inevitably brings.  Not only to decide what will happen, but design a process for working through change.

Communicate openly.  Good communication skills are essential, as well as being able to have difficult conversations and still be friends, and work through different goals and values.  There will be times when you want to go in a different direction than your partner.  If you want the business to grow and develop, you have to accept the difference and see how you can make it work for everyone.  Then you can be happy to be in business.

Trust is essential.  You have to trust each other; you must trust that your partner will be honest, and fair. You may not be best friends but you both must consider each other’s needs and want the best outcome for both of you.

Are you thinking about going into business with someone else?  Check out these three important steps when considering a business partnership or joint venture.  If you currently co-own a business, what partnership advice have you received that has made a difference?  What words of wisdom would you want to share with others about business co-ownership?

My first business partnership

The first business I owned in San Francisco was a retail food business. It was a crash course in how to launch a small business and what it takes to start a business partnership.

first business partnership

Behind the counter at Cheshire Cheese

Know your business partner

My business partner, Michael, and I were good friends before we ever thought to go into business together. We lived in a house with six other people and spent a lot of time in the kitchen. We enjoyed cooking big meals and feeding the rest of the house.

At the time, Michael co-owned a small manufacturing business. As we became friends, I volunteered to help in his business. It was soon clear that we had complementary work styles and had a similar approach to business management. We both saw small business as a vehicle to the principle of “right livelihood” and shared a collaborative approach to decision-making. It didn’t take long before we connected on a common business idea and decided to start a food retail business together.

Start with a good foundation

By the time we agreed to go into business together, we had a solid foundation for a business partnership. Michael had already started a business from scratch and had the technical and computer skills essential for smooth business operation. I had been to business school and had helped other friends start businesses. But what was most important was that:

  • We liked and trusted each other,
  • We knew we could work well together,
  • We had complementary skills,
  • We were both committed to working hard, planning ahead and taking on the risk, and
  • We shared a passion… for gourmet food.

Agree on a viable business model

Our first idea was to start a catering business, making and delivering gourmet lunches to corporate offices. We thought we could use our home kitchen to keep it simple and lower costs. But we quickly learned that making food in a home kitchen wouldn’t be legal. It also couldn’t easily scale.

We then researched taking over an existing restaurant. We found a restaurant that we could acquire. We researched the legalities related to using the kitchen, building out the space, and hiring staff. But the size and complexity of the restaurant was going to require more capital than we had or could raise.
Given our skills, timeline and budget, we decided to compromise and start a gourmet deli.

Do the shoe leather research – street by street

We scouted several commercial strips in the city looking for a location with good foot traffic and reasonable rent. We pounded the pavement on Haight Street, Potrero Hill, West Portal, Noe Valley and Upper Fillmore. Finally, we found an available narrow storefront on Fillmore Street. It was an old laundromat available for sub-lease from the tenant next door, a tennis racket repair shop.

The space was the right price and we negotiated a fair lease. There was a hospital nearby and many new retailers moving into the neighborhood. But now we had another problem – competition! There was already an established deli right across the street. So we pivoted to focus on cheese. We signed the sub-lease and named our new gourmet cheese shop Cheshire Cheese. We were off and running!

Share the load

We spent the next six weeks building out the storefront. It was a community effort. While we focused on legalities and plans, we recruited friends to help with carpentry, plumbing, interior design and graphics.  We figured out how to share responsibility for the business, each taking charge of certain aspects given our interests and skills.

Our partnership success

The success of our partnership and, I believe, any business partnership, was based on:

  • A shared passion and common purpose
  • Compatible personalities and work styles
  • Complementary skill sets and areas of business expertise
  • Good communication and joint decision-making, and
  • A solid plan for how to market and manage the business… and make it work financially!

My partnership with Michael started with Cheshire Cheese and continued on into two other businesses.  This hands-on business partnership experience continues to inform my consulting work today.

Owning a business with others can be an incredibly rewarding experience — but to work well it must be based on a solid foundation and good planning. Are you starting a business with others? Check out these three important steps when considering a business partnership or joint venture.

At Paul Terry & Associates we help both new and established business partners understand and assess what they each bring to the partnership and how they work together. We focus on partners’ expectations, strengths and weaknesses. We help define roles, address key issues and minimize areas of conflict. And then, we help create a written agreement and a plan for how to move forward together.

Starting a business partnership

Starting your own small business can be a leap of faith.  Starting a business with others can be an even bigger leap.  How can you be sure that your business partner(s) will be the right fit – with you and the needs of the business?

business partnership

First, you have to ask a lot of questions – both of yourself and the other person.  You need to understand what you each bring to the business, how you will work together, and how you will handle the challenges.

When our clients start a business in partnership or create a joint venture, we suggest a three-step process:

STEP ONE: Self-assessment

Before getting deep into conversations with a potential business partner about the details of the business relationship, each person should ask themselves some initial questions:

  • Why do I want to do this business?
  • What is my work style and my strengths and weaknesses?
  • What are my goals for the business?
  • What is my level of commitment to the business?
  • What roles do I really want in the business?
  • What are my expectations from a partner?

STEP TWO: Dialogue

After each person has a better idea of what they want and what they could bring to the partnership or joint venture, they need to sit down together to discuss mutual expectations.  By talking it out, it will soon be clear if this could be a good business relationship.

  • Do you share similar values and a similar approach to business ownership?
  • Do you trust each other?
  • How will your individual qualities and skills work together?
  • In what areas do you agree or disagree?

A strong business partnership or joint venture should have:

Good chemistry

You and your business partner must actually like each other!  You will be making many important decisions together.  A foundation of mutual appreciation and respect is essential to get through tough times and make being in business a lot more fun.

Clear communication

You both/all need to be comfortable and willing to talk with each other regularly.  You need to be able to share opinions and feelings honestly and deal with them promptly.  You also need a framework for making important decisions and a process for how to deal with conflict.

Benefits for all

You each must be contributing something unique to the relationship – such as specific skills, an area of expertise, or a management style that will complement the other partner(s).  Each person should bring something critical to the business, such as financial resources, marketing expertise or important connections.  And both you and your partner(s) should feel you are gaining something from the partnership to make it worthwhile.

small business partnership

STEP THREE: An agreement in writing

After going through the self-assessment and dialogue with a potential partner, you may discover that a partnership is not the best business relationship for you or the business.  Great discovery!  Maybe one person would be better as an employee/contractor for the business instead of a co-owner.  Or, there is someone else out there who would make a better partner.

If the process thus far makes it clear that you still want to proceed as partners, a written agreement (signed by both/all partners) is critical.  It should include specifics related to roles and responsibilities, ownership percentages, compensation, decision-making and conflict resolution.  The agreement should also include a process for reviewing, amending and exiting the agreement.

Take the time necessary to figure out that you and the other person(s) are the right match and you all have what it takes to start the business together. Then put it in writing!  This solid foundation is essential for any business partnership.

At Paul Terry & Associates we help both new and established business partnerships and joint ventures.  We focus on clarifying expectations, defining roles, addressing key issues and resolving areas of conflict.  We help business partners create written agreements and action plans for how to move forward together.