The Profit

Cringe-worthy family business stories

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Business + Family = Drama

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Marcus Lemonis, star of CNBC's "The Profit," calls family businesses "the lifeblood of this country." He should know, since he got his start in his family's business after graduating from college.

Working in a family business can offer a level of support that you don't get among coworkers that you meet by chance. It can also make unpleasant dynamics seep into the office, and when you add in workplace drama such as deadlines, payroll and balancing the books, the combination can be overwhelming. Something, somewhere, will crack.

Ellen Rohr is a small-business expert whose primary niche is what she calls "dirty jobs," such as plumbing, heating and electrical businesses. Many of these happen to be family businesses, and she sees certain dynamics play out again and again when she works with them.

"What happens so often is the husband goes off to turn wrenches," she said. "And his wife says, 'This paperwork's never going to get done, so I'll help you.'"

She referred to this as the "I was just helping" mentality, and while it originates from good intentions, it can breed poisonous and permanent resentment. Family businesses are potentially fertile breeding grounds for such ill will.

CNBC.com asked people for family business horror stories that they had witnessed firsthand. While they all refused to name names, they made up for the lack of specifics with plenty of awkwardness and cringing.

By Daniel Bukszpan

The Profit, a reality series with multimillionaire Marcus Lemonis turning around struggling companies, Tuesdays at 10 p.m ET/PT.

Suckered into taking over

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Ellen Rohr worked with a plumbing company that a man had sold to his son. The company used the family name, which was easily recognizable in the small town in which it operated.

As soon as it changed hands, the father started a new plumbing business with the same name in the same town, all after the son had bought the business for $1 million. She estimated that it was probably worth $75,000 on a good day, adding insult to injury.

"What happenswhat happens a lotis dad hasn't saved for retirement, until he found one sucker, and that's his kid," she said.

Enslaving the children

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Rohr worked with a plumbing and HVAC (heating, ventilating, and air conditioning) company that the owner had bought from his father. She said in these scenarios, which she referred to as "enslaving the children," the father sells off the business but retains control over a laundry list of things anyway.

"In this case, dad said, 'I'll sell it to you if you continue to employ your sister as the bookkeeper, because she is, as you know, unemployable,'" Rohr said. She described the sister as "one of those people where there's always a black cloud hanging over her head and nothing's getting done."

Rohr suggested a unique method of getting rid of her while saving the relationshippay the sister to stay home. She accepted the new position, and within two weeks found a six-figure job at another company.


Waiting for 'dad to die'

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"The most toxic environment" Rohr encountered was a father-and-son heating and plumbing company. The relationship between father and son was so bad they had refused to speak to one another directly for three years, and would communicate only through the mother, and only about matters pertaining to business.

Rohr realized she wouldn't be able to help them when she asked the son what his long-term plan was for the business.

"The kid said. 'I'm just waiting for my dad to die,'" she said.

Don’t worry honey, I’ll fix the numbers

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Jay Malik is a tax strategist who works with medical professionals. One was a chiropractor, whose wife handled the practice's finances. However, she didn't actually pay the company's taxes for years and would fudge the numbers on returns, unbeknownst to her husband.

"The doctor caught up with it, but by that time the tax debt was a few hundred thousand dollars," he said. "Since the practice was in the chiropractor's name only, he was held responsible for all the tax debt to the federal government and the state."


The Profit

When Marcus Lemonis isn't running his multibillion-dollar company, Camping World, he goes on the hunt for struggling businesses that are desperate for cash and ripe for a deal. In the past 10 years, he has successfully turned around over 100 companies.

Now he's bringing those skills to CNBC Prime and doing something no one has ever done on TV before … he's putting over $2 million of his own money on the line. In each episode, Lemonis makes an offer that's impossible to refuse—his cash for a piece of the business and a percentage of the profits. And once inside these companies, he'll do almost anything to save the business and make himself a profit, even if it means firing the president, promoting the secretary or doing the work himself.

The Profit, a reality series with multimillionaire Marcus Lemonis turning around struggling companies, Tuesdays at 10 p.m ET/PT.

I’m too busy drilling into molars

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A scenario that Malik has witnessed repeatedly involves one spouse who steals money from a practice that is owned by both jointly. One such example was a husband-and-wife team of dentists.

"The male dentist was not very much into details about money and… had pretty much given total control over the dental practice's finances to the wife," he said. "One day the wife moved out of the house and filed for divorce… the wife had been siphoning off money over many years and taken everything out of the practice account."


A little liquid courage

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Muffetta "Angie" Krueger owns Muffetta's Natural Products, a household cleaning solutions company based in New York City. In 2011 she brought her business to Jamaica and hired a relative to act as a director. The relative blew through the company's money without giving proper accounts, so Krueger responded by showing the employee the door. What could go wrong?

As it turned out, plenty. The relative took Krueger to the ministry of labor. The company car, which was bought with Krueger's money, had actually been registered in the relative's name, so she couldn't get it back. Finally, she got a lawyer to settle the matter. The relative responded by getting one too. Ultimately, Krieger found a foolproof solution to her business woes.

"After too much 'dram' I decided to close the business," she said.

Silent treatment to fistfight

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Daphne Mallory is a speaker and trainer on the subject of family business and the author of such articles as "3 Tips for Running a Business With Your Spouse Without Divorcing or Going Broke." She's observed multiple worst-case scenarios, such as one in which a father transferred his business to his two sons, who immediately turned against one another.

"Communication broke down so severely that the brothers ended up in a fist fight on the factory floor," she said. "The company imploded as employees chose sides and left the business." She told Entrepreneur magazine that keeping lines of communication open is the key to running a family business, and when one party gives the other the silent treatment, they should expect disastrous results.

"There is no faster way to miss deadlines and lose customers," she said.


Back to the land

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Sam Fletcher is the marketing director of a Seattle legal services company, but decades ago he was the young son of hippie parents who went off the grid to become organic produce farmers. They bought 40 acres of land, a farmhouse and a barn, sight unseen.

"When we drove up to the place for the first time in our U-Haul, the place was an absolute disaster," he said. "The farmhouse was crumbling, with mushrooms growing through the carpet and hornets building vast, complex nests in the porous walls… we'd frequently find snakes drifting up the toilet bowl overnight."

His parents stayed the course, but a record number of tornadoes destroyed most of their crops, and ultimately only the turnips were spared. After one year, the dream was dead, the business was a failure and all hope of selling organic produce was mercilessly crushed. His parents responded by answering to a higher authority.

"My parents ended up getting old-time religion," he said. "My dad ended up getting a job at a large ministry."

The Profit

When Marcus Lemonis isn't running his multibillion-dollar company, Camping World, he goes on the hunt for struggling businesses that are desperate for cash and ripe for a deal. In the past 10 years, he has successfully turned around over 100 companies.

Now he's bringing those skills to CNBC Prime and doing something no one has ever done on TV before … he's putting over $2 million of his own money on the line. In each episode, Lemonis makes an offer that's impossible to refuse—his cash for a piece of the business and a percentage of the profits. And once inside these companies, he'll do almost anything to save the business and make himself a profit, even if it means firing the president, promoting the secretary or doing the work himself.

The Profit, a reality series with multimillionaire Marcus Lemonis turning around struggling companies, Tuesdays at 10 p.m ET/PT.