Choosing to start a family business is a viable alternative to going it alone in the business world, and it’s easy to see why. You’ll already know your business partners; there is more stability compared to non-family businesses and there tends to be more flexibility with job roles, making family business an attractive option for many.
If you’re enticed by the opportunity of working alongside your family, you’ll need to get to know the nature of a family business before you get started. To help, we’ve put together this article on how to get your small family business off the ground, so that you can decide whether this is the best option for you.
The main characteristics of a family business
A family business can be defined as a business that is run or owned by the members of one family. Many take this to mean that all members of the family are involved in the business in some way, however, this is not the case. You’re still classed as a ‘family business’, so long as two or more family members own or run the business.
Some examples of family businesses that you may already be aware of include:
- Arnold Clark Automobiles
- Laing O’Rourke Construction
- Associated British Foods – Owners of Kingsmill, Pataks, Primark and Ryvita
The structure of a family business
Although you’ll be working with people you’re close to, it’s important to maintain a stable business structure to avoid problems further down the line.
There are no restrictions on the structure of a family business, therefore you can choose from any of the existing structures, including:
- Sole trader
- Private limited company
- Public limited company
- Limited liability partnership
- Guarantee company (non-profit)
Factors that affect your decision may include the number of people in the business, the reporting structure and how profit-driven you are as a business. Before making any serious commitments, it’s important to sit down with a business adviser and family business accountant to see which option would work best for you both as a family and financially.
How to get started
Before jumping straight into your family business, there are a few things that you should think about, including:
- Your partners – Who will you pick to help you run the business? Despite being family, it’s important to go into business with someone with complementary skills to give yourself the best chances for success.
- Business values – Your business values may differ from your family values, therefore, it’s important to make sure that these are specified from the start.
- Money – Make sure any salaries, remuneration and benefits are discussed and set early on to avoid conflicts further down the line.
- Dealing with conflicts – When working with family it’s likely that you’ll argue from time to time. If these conflicts get out of hand, it’s important to have a plan in place that will help you to resolve them.
Once you’ve got these elements sorted, you’ll have all the tools you need to start your family business.
Contact Alexander’s family business accountants
Working with family means that things tend to be more informal, which is where issues can arise. Speaking to one of Alexander’s family business accountants can help you overcome these challenges and focus on growing your business. Contact us today to see how we can help you.