Looking for some input/advice/thoughts.

I am in the middle of interviewing for a job which would have me relocating myself and my family from Houston to Georgia (Alpharetta area). I have a wife who stays home with our 3 young kids.

The new opportunity is a very small business. The owner is in his early 60's, but claims no plans to slow down and is looking to grow. He needs a 2nd hand man to come in and help run the day to day operations as well as help grow. He started & has run this business for a long time and he has overall been very successful. We have previously met on two occasions through a close family connection. He approached me with the opportunity a few months ago.

My background is in corporate finance/strategy with a two year stint in a role in which I was heavily involved with both the sales organization and operations side of the business. I am soon to be 30 yrs old, have a low-six figure base salary + decent profit sharing bonus, solid 401k options, typical big corp medical benefits, 3+ weeks vacation, and overall a lot of flexibility/freedom as well as lots of exposure to the higher-ups in the company. Without sounding full of myself I am overall on a great career path with a bright future in my current organization.

I am basically looking for input on compensation package a move like this would require, pros/cons/risks of going from a fortune ~100 company to a small business like this, things to consider, etc..

It has always been a goal of mine to eventually break away from corporate America and start my own business. This seems like it could be a huge learning/experience opportunity to take advantage of but I also realize I am essentially at the mercy of the owner and if it doesn't end up being a good fit for whatever reason could put us in a bad spot. While I don't know for sure, I'd say its a good chance there isn't a 401K and no idea on medical benefits.

I'm looking at this of more a 'high-risk, high reward' type opportunity but we haven't really talked numbers yet so I want to make sure I am considering everything when we do. There has to be an incentive for me to take the risk/move & I am pretty sure he understands that. The connection we share is close enough (to both of us) that I have no reason to believe he would try to take advantage of me.

For what its worth, we have a reasonable mortgage & one small car loan, no other debt, 6+ mos emergency fund.

TIA.

I made a similar jump two years ago and it's been wild. I was basically employee #2 in the US. We didn't even have payroll. Now we are 65 and continuing to grow. It's been worth it, but it's the hardest I've worked in my life. Definitely insist on equity and also know the exact plan. I wouldn't be able to maintain this pace without being able to look at our acquisition strategy and the payday with it.

Now, maybe the goal isn't the accelerated growth my company has, so what I'm saying won't matter. But, understanding the goals is very important.

Quote:

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My background is in corporate finance/strategy with a two year stint in a role in which I was heavily involved with both the sales organization and operations side of the business. I am soon to be 30 yrs old, have a low-six figure base salary + decent profit sharing bonus, solid 401k options, typical big corp medical benefits, 3+ weeks vacation, and overall a lot of flexibility/freedom as well as lots of exposure to the higher-ups in the company. Without sounding full of myself I am overall on a great career path with a bright future in my current organization.

It has always been a goal of mine to eventually break away from corporate America and start my own business. This seems like it could be a huge learning/experience opportunity to take advantage of but I also realize I am essentially at the mercy of the owner and if it doesn't end up being a good fit for whatever reason could put us in a bad spot. While I don't know for sure, I'd say its a good chance there isn't a 401K and no idea on medical benefits.

I'm looking at this of more a 'high-risk, high reward' type opportunity but we haven't really talked numbers yet so I want to make sure I am considering everything when we do. There has to be an incentive for me to take the risk/move & I am pretty sure he understands that. The connection we share is close enough (to both of us) that I have no reason to believe he would try to take advantage of me.

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I would basically repeat this to the owner. He has to understand the risk you are taking and the necessity of having some equity in the company. If you're going to be #2, you have to have more skin in the game besides profit sharing. Medical and retirement should reflect what you are having to pay now. His company should cover the rest. If he absolutely refuses then I would run away.

If he agrees, then get some more 3rd party advice on what is a fair equity stake (I don't know your business). Let him offer first.

I would seriously consider because the reward could be 10X what you would ever make in the corporate world. If you're a hard worker it's a great opportunity. If you're a 40 hr/week kind of guy then stick with corporate.



p.s., is it possible to spend a couple of days with him to understand his personality, etc.? I think that would be very important before moving my family across the country. He might be good friends with someone you're close with, but you don't know how he handles business.

How his personality meshes with yours is a HUGE deal. Sadly, you won't truly know it until you get there.

So definitely get some guarantees up front.

Thanks everyone for the replies. I was definitely thinking equity would need to be a factor but wasn't sure how it would typically be structured.

Other than himself, he has 4-5 admin type employees who help with accounting/customer service/purchasing. Then some contractors and outsourcing as needed. I don't know much about company financials. He did indicate during one of our times together (before any talk of working together) a couple accounts he was pursuing that would translate to $20-30MM in additional annual revenues. He has recently made some large investments in manufacturing equipment and a new warehouse. He has a core base of products that are well established that have fueled his company for the last 10-15 years. He has a more recent product (within last few years) that is much higher margins and has been very successful with still a lot of room for growth. My limited industry research suggests this is true.

One concern is he does have a son who recently graduated college. He hasn't shown any interest and lives out of state. He (owner) has stated in the past that his son needs to make a career/join the real world himself.

He is the brother of my wife's step-mom. We spent a long weekend together last thanksgiving and got a long great. I realize that doesn't mean it would automatically translate into a successful working relationship.

I would definitely go visit and spend a few days together before anything was finalized. At this point it's a waiting game. Should hear more in the next week.

There are also ways to structure equity or profits equity too that would be beneficial to both you and him. If you go that route, i would talk with an attorney that deals with M&As specifically.

Update?

Sockerville said:

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Thanks everyone for the replies. I was definitely thinking equity would need to be a factor but wasn't sure how it would typically be structured.

Other than himself, he has 4-5 admin type employees who help with accounting/customer service/purchasing. Then some contractors and outsourcing as needed. I don't know much about company financials. He did indicate during one of our times together (before any talk of working together) a couple accounts he was pursuing that would translate to $20-30MM in additional annual revenues. He has recently made some large investments in manufacturing equipment and a new warehouse. He has a core base of products that are well established that have fueled his company for the last 10-15 years. He has a more recent product (within last few years) that is much higher margins and has been very successful with still a lot of room for growth. My limited industry research suggests this is true.

One concern is he does have a son who recently graduated college. He hasn't shown any interest and lives out of state. He (owner) has stated in the past that his son needs to make a career/join the real world himself.

He is the brother of my wife's step-mom. We spent a long weekend together last thanksgiving and got a long great. I realize that doesn't mean it would automatically translate into a successful working relationship.

I would definitely go visit and spend a few days together before anything was finalized. At this point it's a waiting game. Should hear more in the next week.

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Any update on this? Sounds interesting.

Hahaha I have been there. It's risky. Equity is the only way I would do it again. Left and started my own shingle, after four years I'm doing well but it's a hard road. However I don't regret anything, all bad and good decisions have made me better in business.