On average, the self-employed in the United States are wealthier than the non-self employed and are significantly wealthier than workers and retirees (https://advocacy.sba.gov/2021/08/17/small-business-facts-the-importance- -business-ownership-to-wealth/).  This reality, often without documented research, is frequently conveyed around America by parents & grandparents sharing wisdom with younger generations at family kitchen tables serving pot roasts, lasagna, carne asada, sushi, chelo kabab koobideh, Peking duck, and hamburgers.  Parents all want to see their children experience happy, fulfilling lives where they are able to build a world where they achieve their personal, professional, and economic goals.       

Approximately, 48% of entrepreneurs come from entrepreneurial families (https://conversational.com/forty-eight-percent-of-entrepreneurs-grew-up-in-a-family-business/), a demonstration that these kitchen table conversations are resonating with children in conjunction with their own recognition of the benefits received by their parents in terms of being able to execute on their vision with independence, having personally & professionally fulfilling lives, while achieving financial security for their families.    

No one achieves success alone in life.  Success often is influenced by timing, luck, and the people in our lives. Resources from academic knowledge to money also commonly play important roles.  Funding entrepreneurial business models is often problematic.  The old saying, “Banks lend money to people who do not need money” is based in fact. Small Business Administration guarantees in the United States enhance the availability of money for entrepreneurship, but banks do not desire to lend money and experience failure resulting in internal collection activity and/or a need to seek reimbursement from the federal government.   They know, as do I, that approximately 90% of business startups fail (https://explodingtopics.com/blog/startup-failure-stats).  It is also known that undercapitalization is often one of the most common reasons for failure (https://www.netsuite.com/portal/resource/articles/financial-management/undercapitalization.shtml).  

There is a solution to most problems.  If the road to higher wealth is entrepreneurship and traditional sources for capital are not available to fund entrepreneurs what is the source of capital to start and buy businesses?  The answer is the same kitchen tables that spawned a desire to be entrepreneurs.  Drill into the origin stories of most companies and you will find family investment (https://www.theguardian.com/business/2021/jan/31/small-business-entrepreneurs-success-parents).  It is equally true for many of the largest corporate success stories in the headlines today whether you are talking about Tesla/SpaceX and Elon Musk, Mark Zuckerberg and Facebook (Joe Rogan had a good interview with Mark Zuckerberg recently where they talked about the issues associated with evolving in a changing technological/government landscape:  https://youtu.be/7k1ehaE0bdU?si=WFcKnr_3FB25hbaT), or Jeff Bezos and Amazon, as it is for the construction companies, restaurants, and auto repair facilities in your community.  

IBA, as the oldest & largest business brokerage firm in the Pacific Northwest, frequently facilitates conversations where founders are interested in transferring ownership to their children and multiple generations from families are interested in combining physical and financial resources in entrepreneurial pursuits.  

The transfer of a family business from one generation to another can be a wonderful occurrence preserving family wealth, community leadership, and opportunity.   It also can be a source of family conflict and deterioration of company value and prominence.  My recommendation if this is your objective is to surround yourself with seasoned advisors, move slowly, and think deeply before taking action.  Considerations worthy of being pondered include does the next generation have the knowledge, experience, and acumen to executively lead; is merger of the business better for the company’s future versus continued independence; and how is the value of a company going to be fairly divided among children/grandchildren, if they do not all work in the company.  It is not uncommon for one or more children to continue to work in a family business while others pursue other professional pursuits.  No parent wants to create jealousy or competition among children they equally love.  

Turning to parents & children wanting to combine physical and financial resources in entrepreneurial ventures this activity can take three forms. 

1. The parties can start a new business.  As previously discussed new business startups often experience turbulence on takeoff, but once they take flight many grow into successful business operations.  One strategy I have heard in the past employed successfully by parents for testing commitment and execution skill in children is to have them start a business in the same industry as the parent’s company being able to tap into family knowledge, experience, and resources without risk of damaging the mothership.  Consider a large HVAC company serving the Portland metropolitan area where a son has grown up in the company and fluently knows the business model.  Rather than extending the company’s footprint to Corvallis, where the boy went to college at Oregon State, the child opens a new business in Benton County, Oregon mirroring the service offerings of his parent’s business.  If the son is successful with that business, in the future the companies can be combined and the son given the helm of the entire ship by his father.  
2. The parties can buy an existing business.  IBA has facilitated dozens of transactions of this nature since the turn of the last century.  We have witnessed wonderful mentoring situations where knowledge, experience, skills, and wealth were passed from one generation to another while creating a personally & professionally fulfilling environment for a child where financial prosperity is experienced. If you are a family looking for this type of acquisition opportunity in Washington or Oregon, and you would like to see IBA’s deal flow, participation in IBA’s Buyer Database Program is encouraged.  The document set to participate in this program can be completed through DocuSign on this page of our website:  https://ibainc.com/buy-a-business/
3. The parties can purchase a franchise.  IBA is unique in the business brokerage community in that it has the ability to sell both businesses and franchises (https://ibainc.com/what-we-do/franchise-sales/) to buyers.  Many times a franchise is a wonderful venue for joint parent/child entrepreneurship as it can be in an industry of preference and located in a desired geographic area.  IBA’s VP of Business Development, Curt Maier (https://www.linkedin.com/in/curtmmaier/), welcomes the opportunity to meet with by Zoom or in person any early stage entrepreneurs and provide an overview of both the paths forward toward entrepreneurship through buying a business or franchise.  He is available to schedule a meeting at (425) 454-3052 and curt@ibainc.com.  He is also a wonderful resource for connections to SBA bankers, attorneys, CPA’s, and other acquisition team professionals. 

I come from an entrepreneurial family.  Family members have been jewelers, naturopathic apothecaries, optometrists, veterinarians, furniture store owners, restaurant owners, construction company owners, and technology space entrepreneurs as business owners.  I have been the owner of IBA since 2000.  I would not select a different life path than the one I have selected as it has been professionally challenging, rewarding, and supported my family at a desired level.  

My son, Alexander Kovsky (https://www.linkedin.com/in/alexanderkovsky/) will graduate from the University of Miami with a business degree this spring.  He has entrepreneurship in his DNA and has already started & run his own company.  While I flipped burgers and worked in the athletic department at the University of Texas while in college, he has generated an income as an online influencer ( https://www.youtube.com/@alexxkovsky).  Alexander as a next stage in personal development would like to find corporate employment, so he can observe and learn management and sales within a publicly traded company.  I am biased, but can attest he has achieved success at all levels in virtually every environment throughout his life.  If you are looking to add talent to your team, I encourage you to connect with him.  You may not retain him into his 30’s, but I promise you his work ethic, vision, and ability with enhance the performance of your company. 

IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, and real estate communities on subjects relevant to the purchase & sale of privately held companies and family businesses.  IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.