EntreLeadership - Should My Parents Close or Sell the Family Business?

Episode Date: May 21, 2020

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It's an entree leadership theme hour. The panel answering small business questions. Daniel Tarty, Executive Vice President, Operating Board Member here at Ramsey Solutions, over the All Things Entree Leadership. Ken Coleman, Ramsey Personality, and number one bestselling author of the book, The Proximity Principle. Roz is with us in Indiana. Hey, Roz.

Welcome to the Dave Ramsey Show. How can we help? Thanks for Dave and we call, Dave. It's a great honor to speak to you. You too. How can I help? The question is about my parents' family business. They have a small wine and liquor shop in Indiana.

And when the state was shut down, they had shut down kind of during the peak of the cases in their county. And now as things are starting to open back up, they've been doing close side delivery. They are debating, closing the shop down all together. They are in a really good financial position. their employees are really eager to return to work, especially now with the $600 bonus ending in July on their unemployment. They get a lot of money and tips. They get a lot of support from the community. They sell bottled drinks, cold water, and the community really likes that shop,

and it would be really sad for them to, for the employees, if everyone were to get laid off in the shop were to get closed. My dad's 66, my mom's 64. They, you know, they're very blessed. My dad came to this country with like $300 on his pocket, and now he's worth over $2 million. So if they were to close it, what would they do with the inventory? They could probably sell the inventory off to other liquor stores really easily, even at full price, because, or near retail, because, like. Why would they not just sell the shop instead of close it? Well, they could sell the shop.

I guess that would be part of the closing. So they could sell the shop. They tried to sell the shop. They sold the shop two years ago, and it was very strange. The person they sold it to was having problems with Indiana taxes and wasn't doing everything above board. So the Indiana government actually reverted the license back to the original owner, them.

And so they went back and reopened the shop. But my mom's been trying to retire for years because they're in the financial position to do so. My dad says, you know, we've got three employees. Just because they sold it to a goob doesn't mean selling it as the wrong decision. That just means they sold it to the wrong guy. Now, my dad feels that, you know, maybe the person who buys it isn't going to keep the employees on. They've got, you know, please sell it to one of the employees.

Oh, the employees that they have are, you know, like $7 now. They don't have a manager? No, they, my mom's the manager. Okay, all right. So it sounds like they're ready in the season of life they're in to sell this and have an exit and it sounds like it's concerned about the team. I'll take less for it, but you have to keep the employees for a year as part of the deal. That's not a bad idea, actually. I think that finding the right buyer might be the right move for them to exit, keep themselves safe,

and then also continue the business. That's a really great idea. Yeah, these are classic small business people. They love their employees. Yeah, they hire three single moms. They, you know, they're only making like seven or eight dollars an hour, but with tips and everything, they do really while they support their families on their own. But they would, you know, if they were cold-hearted jerks or parents and they didn't care about their people, the only thing blocking them from selling it is their people. Yeah. And so they just make, make their people part of the deal.

That's really great idea. Thanks, Dave. You guys got any better than I does? Well, you know, the question I have, Roz, is are you calling on their behalf or, you because it sounds like you said they're thinking about not reopening. It's what I thought I heard you say, and I'm curious what your, what your interest is in this. Is it just because you feel for the employees or are you trying to help them make the best decision? Where do you stand in all this?

It's tough because, like, so I haven't been able to sit down with them in months. Like, I'm on the front lines. I work as a position in a different city. And so, you know, I talk to them every day on the phone about how things are going at the shop. I think, you know, I think they made moves to sell it before. They're really ready to retire. You know, they put me in my sister through school. They've saved a lot for retirement.

and I think they're ready to go. I just think my dad, especially with the social distancing, isn't ready necessarily to, he doesn't think it's a great idea to start that season of life now. I mean, with the tax bonuses and everything coming in right now, for people, people are, like, the liquor store has long lines. Like, if he opens at 6 o'clock in the morning, there's 50 people in line. Yeah.

It's crazy. So, like, why should we sell now? Business is the highest it's been in a year. Yeah, well, I mean, it doesn't have to be now. But you could say, you know, when business slows and there's a more normal rhythm to the business after the shutdowns are starting to go away, I don't know when Indiana is opening up. But, you know, you go through those different things, then say, you know, in the fall we're going to sell it. Or next spring, we're going to sell it. See, the thing is, if you've got a target, it takes the pressure off.

And if you just go, we're not going to sell it, we're going to operate it. Well, that's forever. But if you say, we're going to sell it, we're not going to sell it until this happens. The challenge that she has. I mean, she doesn't own the, she doesn't work in the business, but she's trying to help her parents. Her parents are trying to make a good decision. They feel torn between the seasonal life and the team. And, you know, my parents own a business. And it's a little weird talking to them. I know a lot about business. I lead entre leadership. We talk to you guys all the time. Trying to give your parents advice and direction on this, it sounds like you guys

have a good relationship. You can't really just give them the answer. You got to prompt the conversations and give them options and say, hey, here's something to consider. Here's one. I got an idea. You know, in this situation, what if there's a lot of people in the service industry they've been laid off? Restaurant, bar managers, there's some sharp people that need a job right now. I got to believe I would be considering looking for somebody like that who could be a manager in this bridge season that Dave's talking about. Take advantage of this opportunity where people are lining up at 8 a.m. to get liquor. Liquor sales across the country are exploding. I would take advantage of this, get those people back to work, those single moms that they love dearly,

get some people stable until he finds the right buyer. But I think there's plenty of people who can manage that store while they stay at home. Well, then you can also negotiate that your dad stays on for a year or two years to ensure the team is taken care of as the president or, you know, operates the business as a part of the deal. So you could have a good transition there. I think that's a bridge idea. Yeah, and like you said, the good news is there's probably some managerial help sitting at home right now that would love a job. And might even be your buyer. might even just set them in the seat, let them become the fire.

That's what I think. Either one. It's a good discussion, Ross. I appreciate your heart towards your parents. And I appreciate their heart towards their team. Loving on their employees as well. This is the Dave Ramsey Show.