Steve Young has been in been in business with his family for over 30 years—and has co-owned a business with his brother, Jim, for 26 years. Their family venture, Deca Realty Company, is a successful real estate sales and management business based in St. Louis, Missouri.
How have these brothers used their family ties to their advantage? What’s their secret to success?
Truly “keeping it in the family,” Steve sat down with his daughter Abbey—one of Fundera’s very own Senior Account Executives!—and answered a few of her questions on how he’s kept his small business thriving for nearly three decades.
1. Why did you decide to start a business with your brother?
My dad and one of my brothers attended a seminar in 1984 on “how to get rich buying real estate,” and afterwards, they couldn’t stop talking about the idea. I’m one of 10 family members and my dad thought this would be a great way to get the family involved in a business together. Our family has diverse skill sets and the feeling was that we could make use of our different talents to build a successful company.
I had just graduated from Saint Louis University in 1983 and spent a year in northern California working for a neurosurgery practice, and it was decided that I would spearhead this new project. The initial plan was to buy investment properties and have family members manage and maintain them. Many of the family members contributed the initial capital and we got a line of credit that let us buy properties. Over the next few years, we were content on buying a couple properties each year.
It became apparent to me that there was a huge demand for management services in the St. Louis area. We received many calls from different property owners asking if we could manage their properties, so in January of 1990 I opened a new company, Deca Property Management Co., to serve the needs of property owners in St. Louis. I owned the company outright at this point, but employed three family members. A few years later I gave shares in my company to one of my brothers and another person who we employed.
Today, Deca Realty Company—we changed the name in 1995 as we added real estate sales—manages over 1,500 units and employs 23 people.
2. What family members were initially involved?
The initial company that purchased real estate was called Deca Partnership—deca is the Latin word for 10, and I’m from a family of 10!—and was owned by me, my dad, and 7 of my siblings. Deca Realty, a totally separate company, was started in 1990 and is currently owned by myself, my brother Jim, and 2 other property managers with the company.
3. What are the biggest challenges to running a small business that employs family members and close friends?
The main challenge is keeping everyone on the same page. Communication is extremely important. Everyone needs to be focused on the same goal and everyone needs to be given some freedom to pursue that goal. We’ve been fortunate to understand our roles from the earliest stages of our company. I’m responsible for the business side of the operation, and my co-owner and brother is responsible for the property management side. We respect the job each other does and neither of us is interested in micromanaging the other’s responsibilities.
The other important area is transparency. Every important decision is a group effort, and one is never made unless there’s totally agreement by all parties.
Many family businesses are a breeding ground for family problems: jealousy, anger, and resentment. Fortunately, we’ve had none of these issues.
4. On that note, succession planning is often a hot topic for family-run businesses—is this something you’ve started planning for?
From very early on, we’ve had a plan in place that accounts for succession planning in case of the death or disability of an owner. Our plan is funded by life insurance and ensures that the company will survive in case of the untimely death or disability of one of its members.
In regards to the retirement of one of the owners, we also have a plan in place that values the company on an annual basis and provides a detailed process for payment of the value. The plan favors the company and not the individual owner, meaning that the survival of the company is more important than any one owner. We calculate the value annually and everyone knows what they would get if they want to retire. The value is paid off over many years so that we don’t put the company in a bad financial situation. Upon retirement, we would just hire new people to take over the retired owner’s responsibilities.
5. How do you balance family time and work time, when the two are so closely combined?
It’s important to leave work at work. If you do the things I mentioned above—knowing your job, treating people fairly, communication, and transparency—then the two don’t have to conflict. I don’t spend a lot of time dwelling on work when I’m at home and I don’t spend a lot of time talking about family when I’m at work.
6. What advice would you give to other entrepreneurs planning to go into business with a family member?
I’d recommend that each owner knows their specific job responsibilities, communicate frequently, and treat everyone fairly—no one is more important than anyone else—and that the company provide transparency in all financial matters. I’d also say that the advantages far outweigh the disadvantages. I would argue that family businesses, and especially family owners, are more committed to their business, take better care of their employees, and put the company first and themselves second.
The post Keeping It In the Family: How These Brothers Have Kept Their Business Thriving for Almost 3 Decades appeared first on Fundera Ledger.
from Fundera Ledger https://www.fundera.com/blog/2016/03/11/keeping-it-in-the-family/