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    8 Replies Latest reply on Jul 6, 2009 6:28 PM by LUCKIEST

    STUCK BETWEEN A ROCK & A HARD PLACE. NEED ADVICE

    BUSYPHIL365 Wayfarer

      I work for a small independent Insurance agency. My parents bought the buisness in 2002 and soon after I came to work for them. We have been here for seven years now and at this point neither of them are capable of writing a policy with out me having to go back and fixing something they did wrong. There has been talk of selling the buisness and the price they are asking is actually less than what it should be. I would love to be able to buy them out but I do not have access to the capital nor do I have collateral to put up in order to do so. Since they bought the business the revenue has increased by five times. The increase in production is around eighty percent from my doing. Any given month the amount of policies i have written is double of what our other employee writes. I know removing my parents from the picture as well as replacing the other employee we could stand to increase our profit by a minumum of another fifty percent. Right now it seems that i am stuck between a rock and a hard spot. Basically the way i see it I need to buy them out which is what i would like to do or just walk away and lose the past seven years i've put in to grow the business. Any advice would be greatly appreciated. Thankyou
        • Re: STUCK BETWEEN A ROCK & A HARD PLACE. NEED ADVICE
          puzzleman Tracker
          Hello BusyPhil, If your parents want to sell, you want to buy, enough money is being generated to pay a loan, and business can go up, why not ask your parents to sell you the business on credit.

          For example, the printing company next door. The parents started the business and then sold it to their sons on a loan. they cam up with a small down payment and paid it off in five years. It was a win / win. The sons didn't have to get a loan from a bank. the parents didn't have to find a buyer. The parents didn't have to report the income in one big lump.

          If that doesn't work, contact your local bank to get a loan. If the business is doing that good, you shouldn't have a problem.

          Jim
          • Re: STUCK BETWEEN A ROCK & A HARD PLACE. NEED ADVICE
            LUCKIEST Guide
            NEED ADVICE, Welcome Phil

            The first thing I would do is talk to your parents. Let them know that if and when want to sell the business, you would be interested in buying the business.
            Maybe they want to work part time for a while. Go on vacations or go south for the winters.
            Communication is the important word. Get a feel for what they want. They own the business.
            The business has both an accountant and a lawyer. Right.
            When your parents want to sell, they can take notes and you can pay them monthly.

            As i said. Talk to your parents and get them to understand your wishes.

            Good luck, LUCKIEST
            • Re: STUCK BETWEEN A ROCK & A HARD PLACE. NEED ADVICE
              Lighthouse24 Ranger
              The relationship dynamics of a family-managed business are usually a lot more complex than you've indicated -- but based on what you've provided, I'd have to ask if your parents have any kind of succession plan or strategy in place that involves you taking over the business in the future (and if not, have you proposed or discussed one with them)?

              If not, that's your first step.

              If so, and if the situation is such that it's not in the cards for you to take over the family business, then you're basically an employee -- and you need to make decisions accordingly if your goal is to own/run your own agency. If you're bringing in two-thirds of the business in a company that has grown five-fold in seven years, then you undoubtedly have the credentials necessary to move to another agency or underwriter, and very quickly put yourself in the position you seek. You noted that you don't want to "lose the past seven years i've put in to grow the business," but if you're never going to be able to get it anyway, then you're not really losing anything (except time). It may be better to go now rather than later, if that's what will ultimately happen anyway.

              Good luck!
              • Re: STUCK BETWEEN A ROCK & A HARD PLACE. NEED ADVICE
                onpurpose Adventurer
                Hi BusyPhil,

                The advice to you thus far is right on point. It can be hard negocitating with parents. My suggestion would be to find a third party or small group of advisors - CPA, Banker, Lawyer, Financial Advisor, Business Assessment, for example - to help you all craft the business points fairly. I sense you emotion in the matter.

                I must admit I'm a bit surprised that you all haven't talked more
                directly about these plans before. It speaks to the family dynamic
                and why you probably would benefit
                for third party participation to sort things out for you.

                You did start your post with, "I work for..." That says it all. The good news is you are related and have a leg up on others who might step up to buy. Given your confidence in the upside potential of the agency, be generous and honoring of your parents. They may not do things exactly right but they did buy the agency and were smart enough to bring you into it.

                Be On-Purpose!

                Kevin
                • Re: STUCK BETWEEN A ROCK & A HARD PLACE. NEED ADVICE
                  BUSYPHIL365 Wayfarer

                  Wanted to say thankyou to every one who chimed in. The main problem right now is that in talks of me taking over the business. We can't get to the point where they agree to sell it to me. The 1st step i can't seem to get them past. There are always a million questions they ask instead of answering my question of taking it over and them agreeing. More than likely i'm going to have to get a third party involved as was said above. If I were able to take over the business the way I would like, basically I would just remove them from the picture all together once we have determined a payment plan. If that is something that I'm not able to accomplish then I will have to find an outside investor and work something out that way.
                    • Re: STUCK BETWEEN A ROCK & A HARD PLACE. NEED ADVICE
                      onpurpose Adventurer
                      It may seem an obvious question, but.... Do they want to sell? What do they have to go to if they do sell? They may be too young to face retirement, and too old to want to strart something new. The alternative for them may just look like sitting at home staring at the walls. Who would want to sell given that alternative.

                      Ask them to paint a picture of the future that is in the direction of their dreams. Let them develop a vision of what the future could be and become. You, as their faithful son, wants to help fund that dream by buying them out.

                      Another thought is a 51% buy out with 10% per year for the next five years. A gradual plan rather than an abrupt plan may be a way to ease them out. In this context they are participating in the upside growth you plan to create. But this is your parents. Sounds like they've done you right through life in general, invested in raising a good with an education, why not let them participate in the upside. How can we ever repay parents who did a fine job raising us? This is one way to honor your mother and father and sqeeze out from the rock and a hard place.

                      Be On-Purpose!

                      Kevin
                      • Re: STUCK BETWEEN A ROCK & A HARD PLACE. NEED ADVICE
                        puzzleman Tracker
                        Phil, My advice is to LISTEN to the questions. What I mean is what are the questions telling you? What is the ideas behind the questions? Slow down, relax and think about their questions. they are trying to say something with their questions. I presume they don't know how to say it outright but you need to look at the big picture and see what they are saying.

                        As mentioned above, maybe what they are saying is that they don't want to leave just yet. The other thing is that this is their baby and it is hard to let something go. Another point is that since it was their business, maybe they don't feel secure yet with you running it. (I know that I still see my grown up kids (ages 23 - 31) as young kids).

                        These are just thoughts.

                        Jim