Are you joining or running a family construction business? Do you find it hard to handle family partnerships?
Our guest for today has learned it the hard way.
In this week’s episode, Systematized Your Construction Business (SYCB) coach, Monish Khadye, sits down with construction business owner and SYCB mentee Jake Lewendal.
Jake built Momentum Development after coming out from two business partnerships, one of which was a family partnership that took a toll on his family.
Today, Jake shares some key learnings from his family partnership, the best practices when considering joining a family business, and a few crucial things you must do upfront when setting up a business partnership.
Family Business, Risky Business?
Jake Lewendal started working in his dad’s construction business when he was just 12 years old – cleaning up and sweeping floors.
When he turned 17, he already did some management tasks for his dad but decided to get out and went into real estate by age 23.
Even with an early background in the construction industry, Jake started his own company by partnering with his father-in-law.
He started it in 2014 with him being in the back end while his father-in-law was the site guy.
It started so well that they were already hiring people to join their growing team, including his wife, who joined them as the bookkeeper.
But as we all know, all good things must come to an end.
Family dinners became business meetings, conversations became arguments, and warm greetings became a deafening silence.
What was once a booming family construction business became a stressful workplace.
In early 2018, Jake and his father-in-law decided to finally split up with no option for dissolution as they had a $10M giant project back then and employees to support.
The Root Cause
So what really led to the breakdown?
Jake pointed out that communication was the root cause of their unhealthy family partnership.
He admitted that he couldn’t even come to the table and be direct with his father-in-law/business partner because he feared that his wife’s dad would discount his feelings and ideas.
As a result, what started as being afraid to take hard conversations, created resentment in him, which then turned into an explosion.
But even with the hard lessons he took with him in his failed family partnership, Jake got into a second partnership because he was trying to fill a void or a weakness in him with someone else.
And, as everyone isn’t perfect, that partnership didn’t work out well. Jake has then learned to be confident and able to move forward without leaning on someone else.
Family Partnership Tips
When a business fails, getting your way out of it is easier if you’re on your own. But when it comes to family partnerships, it gets a little tricky.
So here’s what Jake has to say for those who are or still considering getting into a family internship.
1. Have everything in writing!
A partnership agreement is absolutely necessary when you want to get into a family business. And it shouldn’t be just any partnership agreement.
Based on Jake’s experience, the agreement shouldn’t be vague; you won’t need to hire an arbitrator or legal counsel when you have issues.
In a business partnership agreement, have everything – all the possible scenarios – discussed on the front end and written down, leaving no uncertainty or loophole that could be potentially misinterpreted.
2. Be transparent about exit plans
Like any other business owner, when you see your company growing well, you’ll get to a point where you want to stay involved for a long time but simultaneously want to do a partial exit.
As good as your intention could be, it could make your partner(s)/family unhappy.
You have to discuss upfront what is your exit plan.
Talk about what the company setup would look like or to what extent your involvement would be when you decided to be that old guy who wants to drive from job site to job site to check in on things 2-3 days a week while your son runs the main thing.
To learn more about practical tips and best practices of family partnerships, listen or watch the full episode HERE.
Additional Resources:
– Schedule a FREE breakthrough session now with our team HERE
– Learn how to get out of your business and make it run without you HERE
– Visit Construction Leading Edge for more HERE
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The Construction Leading Edge Podcast helps construction business owners maximize their revenue, eliminate chaos, systematize their work, and win back their time.
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