As featured in Cotswold Business and Professional Life – July 2014
Written by: Ruth Dooley
Contact details: firstname.lastname@example.org
Family businesses are incredibly important to our economy and to its recovery from recession. There are three million family businesses in the UK employing about 9.2 million people. Historically they have contributed to almost a quarter of the nation’s Gross Domestic Product.
No wonder, therefore, that they should be recognised for their achievements and encouraged in their endeavours. These awards celebrate those businesses that have demonstrated real success across a broad range of categories. They have all had to face, and overcome, many obstacles over the years. It is worth reflecting on some of those challenges and suggesting how professional advisers to family businesses might be able to help.
One of the main concerns unique to family businesses is the tension that often exists when there are both family and businesses relationships. From nepotism to divorce, from reward to responsibility, from fear of failure to fair succession, family boards have a minefield of issues to negotiate.
Many of our clients ask us to sit on their boards to be an independent voice. We can help to resolve these issues or sometimes even see them off at the pass.
Letting in outsiders
Some family businesses are reluctant to recruit non-family members into senior positions, even when the business is outgrowing the capacity or even competence of family members. This can cause stagnation as it inhibits the growth of the business.
Professional advisers can help with the recruitment process. Also, we are often aware of suitable candidates in the general market place who might fit the bill.
There can be an even bigger issue around ownership of the business. Some family members may be shareholders, but don’t participate in the running of the business; there might also be difficulties with non-family stakeholders or a desire to introduce employees into ownership.
Advisers can help with the legal, accounting and tax aspects of share ownership, share option schemes and asset protection for owners.
More than half of family owned businesses fail to plan for succession, yet a large number of them would like to pass on that business, or its value, to the next generation. There are many issues around the transition between generations from both the emotional and practical perspective.
Exit planning, management buy-outs or buy-ins, planning the succession strategy; these are regular tasks for many business advisers, whereas family members often only have to face them once in their lives. Therefore it makes sense to consult with those who have real experience and expertise in these areas.
Family members need to agree on the direction and strategy for their business. It may be time to start exporting, try a new product or even buy another business. It might be more appropriate to take stock and consolidate what is there already.
Professional advisers can help with these decisions and signpost business owners to appropriate sources of assistance. For example, UKTI can provide funding and support for family business that are looking to export their goods or services.
The key point for family business owners is that they do not have to carve their path alone. Good professional advisers want to travel the journey with their clients so invite them along. They could be the best family member you never had!