The challenge of keeping a business within the family can often come down to one of two scenarios: a business owner wants to keep the business within the family but the kids just aren’t bighting, or the kids are hungry to take over but the person who built the business up from the ground isn’t ready to let go.
When it comes to keeping a business in the family, it is often a great idea to seek the advice of a business coach, or at least an accountant, to help you set up a clear succession plan. Through this process, you need to identify the goals of everyone involved and what sort of time and effort individuals are willing to put into the business.
Using a succession plan, the family can map out certain points in which responsibilities and finances are handed over. This can alleviate stress for both children and parents, as negotiations about timeframes can result in neither party feeling like that they have been forced to either take on an entire business themselves or relinquish their business to someone with less experience.
What are the pros and cons of keeping a business in the family?
Many entrepreneurs who want to buy a business and use a business broker to do so would kill for the chance to learn the ropes of a business through their parents or other family members. The biggest pro of a business succession is the ability to maintain continuity in how the business runs.
A young approach can often be a fresh approach. Younger family members can bring change and growth to a business.
There are clear financial advantages through keeping a business within the family. Develop a strong relationship with an accountant who can help you to minimise your tax and the costs associated with transferring ownership of the business.
Good will can be cultivated and maintained by keeping a business within the family. This ensures the health of your business as family-owned businesses promote confidence within your clients.
Just as bringing up children is made that much easier within a tight-knit family, growing a business can be seen in a similar light. Keeping a business within the family can mean that individuals can have the personal freedoms to spend more time with their families in a more understanding work environment.
A business is tied to the identity of the individual who built it. Vice versa, the identity of the individual who built the business is tied to that business. Personality can play a large role in dictating how successful or hassle-free the transfer of a business can be.
There is always a risk within a family business that those inheriting positions may not necessarily deserve, or be capable to administer, the responsibilities of their role. This is a much harder factor to avoid, and relies more on parenting and how children are brought up to view the business.
As a business owner, it is unwise to assume your children will want to take on your business, and even more unwise to rely on this. Not only can the assumption create rifts within the family, but it can be financially detrimental.