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A Family Business? Keep It Candid

October 11, 2006|Karen E. Klein | Special to The Times

Question: Several of my family members are teaming up to start a restaurant. What issues should we consider?

Answer: The standard issues facing any start-up business include choosing and establishing the operation's legal structure, writing a business plan, selecting a location and securing funding.

"Salaries and bonuses should be agreed upon upfront," said John Barsella of the Blackman Kallick Family Business Center in Chicago, noting that such an understanding is particularly important for families, for whom emotions can complicate basic business issues. When deciding on compensation, make sure you consider capitalization of your restaurant and your expected return on investment, he said. Those details should be a part of your business plan.

After the restaurant opens, foster good communication by holding regular meetings. Put both business and family matters on the agenda, advised Bob Harrison, whose family has owned Green Street Restaurant in Pasadena for 27 years.

"Be very clear about what job each family member is responsible for. Each person may be 'an owner,' but there will be many areas of the restaurant that somebody is going to have to be in charge of," Harrison said.

Know how you will make decisions: Does a simple voting majority prevail, or do you need unanimous approval? Agree from the start that honesty and openness will trump any reticence about offending a relative's sensibilities. You're not just family members now, you're also business partners.

"If there is ever a time when a family member is not feeling OK

Outside consultants can help bring clarity to relational issues, so don't hesitate to bring them in when you're at an impasse, Harrison said. One such source is the University of Southern California Family Business Network (www.marshall.usc.edu/web/FamilyBusiness.cfm), which offers peer groups and seminars.

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No Tax Breaks for Minority Hiring, but ...

Q: The workforce at my small business is mostly minority employees. Are there any tax breaks or government programs for me?

A: There are no breaks or programs available nowadays for businesses that hire minority employees.

"With the current federal administration, there are very few supportive programs for minorities," said Roberto Barragan, president of the Valley Economic Development Center. State affirmative action programs based on race, sex or ethnicity were outlawed with the passage of California's Proposition 209 in 1996.

If your business is in an area designated as "economically distressed," you should investigate federal empowerment and state enterprise zones. These provide tax breaks and special incentives for businesses headquartered inside the zones that hire workers from the surrounding community. Information on the programs is available at www.lacity.org/cdd/bus_state.html.

If you are a member of a minority group, look into becoming certified through the Small Business Administration's 8(a) Business Development program, which helps disadvantaged small-business owners through training and special set-asides on government procurement contracts. Information about 8(a) certification is available online at www.sba.gov/8abd. You can also get advice and help with the application process if you visit a Small Business Development Center. Call 1-800-U-ASK-SBA to find the nearest center.

Companies that hire disabled, dislocated or economically disadvantaged workers under the Workforce Investment Act of 1998 are eligible for certain subsidies for their employees. There are several centers in Southern California that administer the WIA program. Additional information and addresses of Los Angeles County centers are available at wib.co.la.ca.us.

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Got a question about running or starting a small enterprise? E-mail it to karen.e.klein@latimes.com or mail it to In Box, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012.

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