Raised to start a business; Offspring from family-run firms explain how parents can help

December 30, 2013 5:24 pm

Raised to start a business

By Jonathan Moules

Jack Barber was born into a family of food entrepreneurs. Barber Foods, a frozen-poultry company, was started by his grandfather in 1955 shortly after arriving in the US from Armenia.The Maine-based company, which claims to have introduced dishes such as chicken cordon bleu and chicken kiev to the American family dinner table, had more than 900 employees at its peak.

After the grandfather died, Mr Barber’s father ran the business for a while before selling it to Cincinnati-based Advance­Pierre Foods in May 2011. That same year, having only just started at college, Mr Barber took up the entrepreneur mantle again by co-founding Mainely Burgers, a food truck selling snacks on local beaches, with his friend Ben Berman. His younger brother was among the first employees, and the company now has 16 employees on the payroll, all working part-time while studying at college or high school.

“My parents have played a pivotal role throughout developing Mainely Burgers,” Mr Barber says. His father backed the venture with money in the early stages, but was also on hand to offer advice. This was not about making up for giving up the family business, Mr Barber insists.

“Having entrepreneurs in your life makes a difference,” he says. “They are great in playing devil’s advocate when starting a business – [such as for] unveiling flaws in a business plan. I remember having to revise the Mainely Burgers plan numerous times until it finally got the OK from my dad.”

Mr Barber Snr could also be called upon for free help on some of the more basic problems. “Dad is ex­tremely handy around machinery and saved us a few times whether [it was] changing an oil cartridge or jump starting one of the trucks,” he says.

Mr Barber acknowledges that having witnessed at first hand as a child what an owner-manager faces made it seem “a natural thing to do” to start his own venture.

Certainly, a range of academic res­earch indicates that parental entrepreneurship plays a critical role in determining whether offspring be­come entrepreneurs themselves. A study in Sweden by Mirjam van Praag of Amsterdam School of Economics last year found that having entrepreneur parents increased the probability of someone setting up a business by about 60 per cent. However, Mr Barber notes that entrepreneur-parents are not the whole story because co-founders and outside mentors are important too. “It is beneficial having entrepreneurs in the family, but that alone will not make it happen.”

For all the benefits of being part of an entrepreneurial family, Mr Barber warns against becoming a closed group. “The key is surrounding oneself with a supporting cast,” he says. “This cast includes entrepreneurs, family friends and your team.”

The Kauffman Foundation, a US-based think-tank specialising in entrepreneurship, came to a similar conclusion in 2010. Its survey of just over 5,000 young Americans found that almost half of those who knew an entrepreneur personally had created a business themselves or were planning to start one.

In her recent autobiography, In My Shoes , Tamara Mellon, creator of the Jimmy Choo shoe brand, pays tribute to her father, the Vidal Sassoon co-founder Tom Yeardye for a £150,000 loan and a “kitchen MBA”.

The inheritance factor for start-ups

Jack Barber and Lopo Champalimaud on the pros and cons of entrepreneur parents:

 The benefits
Money and advice 
Jack Barber: “My father has invested money into the business but has been an even bigger help with giving us advice and helping us through difficult decisions.”
Lopo Champalimaud: “My mother did invest a small amount and sometimes gives me advice, mostly on design and branding issues. But the biggest thing she gave me [was] the encouragement to take the plunge.”

Kindred spirits 
LC:
 “The biggest advantage has been having someone who understands some of the emotions that I might be going through first-hand. Sometimes it’s reassuring to know you aren’t the only person who has had to face some of these challenges.”

Early lessons
JB: “I was able to learn at a young age the values and fortitude that you truly need to run a successful business. A lot of issues that arise in owning your own business are not taught in business school.”

 The challenges 
Narrow focus
LC: “It’s sometimes a bit of a challenge to remember there is more [to think about] than your respective businesses” – the family end up discussing each other’s business interests instead of the competition.

Closed-group mentality 
JB: “We need to attract people with different mindsets to follow [our] lead. You really need to . . . be open for criticism.”

Nonstop talking shop
LC: “You have to remember to make time for other aspects of family life.”

Ralph Lauren’s daughter Dylan created the Willy Wonka-esque sweet shops Dylan’s Candy Bar, while Hong Kong telecoms tycoon Sir Li Ka-shing’s sons Richard and Victor have founded enterprises of their own.

Children of entrepreneurs may start a venture within the parental business, rather than setting up their own venture. Hans Homberger’s family has owned and run a coffee growing business in El Salvador for four generations. In recent years, he has brought the family business, Fourth Wheel Coffee, into the 21st century by selling the beans online.

Being the child of owner-managers may make you more willing to go into business, but there are drawbacks, Mr Homberger says. “In many cases I’ve seen that the founder-entrepreneur has placed his son in a comfortable position in his company.” In such cases, he says, “since you are not pushed, you do not train your brain to think in a creative way which is absolutely essential for an entrepreneur.” The answer is to push yourself: “Once you get a venture off the ground and see how it grows, it gets you energised and in general very happy with life.”

Lopo Champalimaud founded Wahanda, an online booking service for health and wellness clinics in 2008 after working in senior roles at start-up Lastminute.com and Travelocity. His mother Alexandra Champalimaud founded the eponymous luxury interior design business Champalimaud, but for him to follow suit and set up a business was not predetermined, he says. Wahanda was the result of him discovering that health spas in London were shut by the time he clocked off from long hours at Lastminute.com.

“When I first graduated from university I thought I wanted to become an investment banker but no one would hire me,” he says.

His ambition changed during an internship at a venture capital firm. “It was there that it really hit me: I wanted to be on the other side, building businesses from the inside.”

With hindsight, Mr Champalimaud thinks he had an independent streak, but developing the confidence to build his own business still took time. “I was very aware of all the challenges my mother went through,” he says. “She is an immensely talented designer but also unimaginably determined and resilient.

“I have learned everything from her but perhaps the most important lesson was that to be successful, an idea wasn’t enough.”

He realises now too that one of the important lessons he unconsciously learnt as a child was that the line between work and home is blurred. “Even after my mother’s company had far outgrown our basement, the work still came home,” he says. “I remember feeling that I too was living the ups and downs of the business. I was aware of every pitch, every contract won, every project lost. I knew the clients who were difficult and those that had been supportive through the toughest of times.” At the time, it weighed on him but now he realises that he learnt that inevitable setbacks are part of the entrepreneur experience.

Mr Champalimaud has a six-month-old daughter. “I want my wife and eventually my daughter to be aware of what is happening in my day job but I don’t want them to be burdened by my stresses and challenges,” he says.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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