Boomerang CEOs

More entrepreneurs are coming out of retirement to help run their children's businesses

By Eileen P. Gunn

Browse Issues

Browse the BusinessWeek Archive

Related Items

• Starting a Business Instead of Retiring

Lane and Tara Nemeth: One brings money and experience; the other brings a willingness to learn Ericmillette.com

Nicole and Steven Bernand: "Things are starting to smooth out," he says, "but there have been times when we've wanted to kill each other" Ericmillette.com

Story Tools

• post a comment
• e-mail this story
• print this story
• order a reprint
• digg this
• save to del.icio.us

Sondra and Allyson Ames: They've learned to delegate according to strengths Ericmillette.com

Steve Bernard figured he had cashed in all his chips—that is, Cape Cod Potato Chips, the company he'd founded, sold to Anheuser-Busch (BUD), and repurchased after the brewer shuttered its snack-food business. Along the way he'd also started Chatham Village Foods, a maker of fancy salad croutons. In 1999, Bernard, then 60, sold both companies for good. "I thought, all right, I'm free at last," he says. Bernard spent the next few years in Florida and on the Cape, happily paring his golf handicap.

Then his daughter, Nicole, called with a request. Nicole, who had worked at both of her father's operations, told him she wanted to start an organic-snack company—with him as her partner. Steve's first reaction was to say no. He assumed her business would have a lot of relatives on staff, as his startups had, and he wasn't sure she understood what she was getting into. "I don't think people have any idea how difficult it is to work and stay close as a family," he says. "When you throw in the financial pressure and problems of a startup, it's just incredibly hard."

But Nicole, 34, persisted, and in 2003 they launched Late July, the 15-person, $12 million maker of organic crackers and sandwich cookies in flavors including peanut butter and vanilla bean with green tea.

No one can say for sure how many veteran entrepreneurs have started companies with their kids, but family business counselors expect this sort of enterprise to grow more popular. Today's young adults are comfortable having their parents as mentors, coaches, and advocates throughout their lives. As for their parents, Lloyd Shefsky, co-director of the Center for Family Enterprises at the Kellogg School of Management, points to all the folks reinventing themselves in their 50s and 60s. "More people are starting businesses at this age," says Shefsky, "and if you want to come out of retirement, this is one way to do it." Many entrepreneurs, too, thrive on the startup phase and lose interest as a business matures. A partnership in which they pitch in during the hectic early days and pare back while their child takes over can be perfect for both.

But transforming a parent-child dynamic into a business partnership poses emotional and practical questions, from how to address one another in front of clients to who makes decisions when you disagree. The occasional dramatic flareup seems inevitable. Running Late July with her father has been like "the Steve Bernard MBA program," Nicole says, which is what she'd hoped at the start. Still, her father admits the transition to business partners was a little rocky. "I love that I'm able to work with Nicole and we're getting to the point where things are starting to smooth out," he says. "But there have been times when we've wanted to kill each other."

Every family and business is different, so there's no right way to address such concerns. What matters, says Shefsky, is that communication be fluid and frank—often a challenge when family is involved. Both partners must aim to agree on major issues such as mission, responsibilities, and exit strategy.

MONEY TALKS

Given Mom or Dad's prior success, chances are the parent has startup capital or access to credit that the younger partner lacks. Before launching, talk about this financial inequality and its implications for control and responsibility. Some parents think putting up the money gives them additional rights. "They feel the buck stops with them, and if it doesn't work they can pull out and walk away," says Ira Bryck, director of the Family Business Center at the University of Massachusetts at Amherst.

Such has been the model at Petlane, a $500,000, six-person company in Concord, Calif., founded by Tara Nemeth, 32, and her mother, Lane Nemeth, 60. Lane started her first company, Discovery Toys, when she couldn't find worthwhile educational playthings for Tara. She sold it to Avon in 1997. Her daughter inspired Petlane as well.