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Investing in Family

Richard Hayman

AS A MEMBER OF THE lucky sperm club, I reluctantly joined my father in business in 1970. I know it was his dream, but it wasn’t mine. He started his cash register business in 1938 and, by the time I signed on, the industry was still steep in mechanical devices. Not my passion. I liked electronics.

Still, I agreed to do things his way and learn the business from the ground up. He said the first thing I had to do was learn to sell. Once I did that, he said, I could do anything I wanted in business. I sold cash registers for 12 years, and then my brother and I bought my father’s company.

It was the only way to get him to finally retire and really enjoy himself. My brother and I had a genuinely good relationship and we worked well together. We were ready to risk taking over the business.

To fund my father’s retirement, our accountant had to figure out the best way to supply him with income at a level we could afford and that he would agree to. To make it work, we also bought his building. My dad was extremely optimistic—he gave us a 30-year mortgage. At the time, he was age 68.

Looking back at the deal we made, it didn’t seem especially “rich.” But in today’s dollars, we paid him about $15,000 a month. Half of that was taxed at capital gains rates.

After my brother and I sold the business in 1999, we went our separate ways. He was much younger and wanted to work. I was ready to retire, or so I thought. But being only 54 and not willing to play golf daily, I went back to work for a few more years. In any case, I really didn’t have enough money to retire since I could potentially be retired for many more years than I’d worked.

In the meantime, my daughter and her family were moving back to the East Coast from California, and wanted to start a business. I didn’t think it was a great move, as my son-in-law was very inexperienced. Also, they had no money.

My thought was to help my kids, and make an investment in someone I trusted. The risks were huge, though I didn’t think I could lose it all. With any luck, my son-in-law might listen to me from time to time, and accept my help.

Fortunately, he was far smarter than I gave him credit for, plus my daughter was exceptionally good at marketing. After three years, my monthly income from their business grew to a meaningful amount.

But I had other children and stepchildren who also had dreams of starting their own businesses. What I learned: I didn’t get the opportunity to refuse to invest. Once you bankroll one child’s business venture, you must do it for the others.

I wasn’t in a strong enough financial position to invest in a failure—and we suffered two of them. One was big and the other was relatively small. I went from feeling good about not running out of money to being extremely worried.

This story has a successful conclusion money-wise, but not life-wise. My son-in-law sold his business, and my share of the proceeds gave us enough to make it through to the end.

Unfortunately, last year, my wife fainted, fell and suffered a traumatic brain injury. While her recovery can be called miraculous, she has some significant residual handicaps. All I can say is, we’ve been extremely lucky with her recovery, and our long-term-care insurance allows her to have the care she needs throughout the day.

We learned once again that life is full of surprises. Long ago, we decided we wanted to age-in-place. We made modifications to our home to accommodate hospital beds and caretakers—but we never expected to need them while still in our 70s.

Richard Hayman is a second-generation family business owner and inventor with three patents. He studied engineering at Cornell University and received a master’s degree from George Washington University. After his family’s business was purchased by a public company in 1999, Richard went on to enjoy several additional careers. He’s also been a STEM instructor for middle and high school students in after-school technology programs.

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