Family businesses account for 25% of the British economy and there are over 12.2 million people employed by family businesses in the UK.
They form an important part of our local communities and are the backbone of our economy. Whilst you may have been waiting in line to take over the family business, there are a number of pros and cons of family-owned businesses, which you need to consider. Read on to find out the advantages and disadvantages of taking over a family business.
Advantages of taking over a family business
No need to start from scratch
If you’re about to take over the family business, you’re not only becoming a first-time business owner but you’re getting a head start on building a business. You will already have an established brand, business model, customer-base and income. The company will also have existing agreements and relationships with vendors, banks and investors.
If you had started your own business, these types of relationships and years of operating within the industry would have taken years to build. Growing up in a family business also gives you a prior insight into the inner workings of the business, industry and your customers, reducing the learning curve.
Inherit a knowledgeable workforce
You won’t need to waste time or resources building a talented workforce. By taking over the family business you will already have talented and trained employees working for you. They will have previously worked with customers and vendors and will know how the business functions, making the whole transition to you a lot smoother.
Ensure it remains a family business
Family businesses are not only important to the economy of the UK but they also form an essential part of the local communities they are in. Contributing to the local economy, providing jobs and in some cases, they are an institution with years of local history. Carrying on this legacy for your family and the local community is not just a huge responsibility but it can also be extremely rewarding.
Disadvantages of taking over a family business
Prepare for family intervention
One of the biggest challenges of a family business is balancing the various members of the family and not letting your work life crossover into your personal relationships. You should prepare yourself for members of your family to intervene if you’re taking over the family business.
The true state of the business
Once you take over the family business, you’re getting it with all its baggage, good or bad. You’ll be tasked with settling any disputes, maintaining and boosting the morale of the employees as well as possibly having to upgrade the technology or processes to modernise the business.
If the business has a poor reputation or on-going disputes, the wounds may be too deep to repair.
You aren’t taken seriously
If you’ve been selected to take over the family business, you may struggle to put your stamp on things. Clients, employees and suppliers may disregard you before you’ve had a chance to make your mark, based on the fact that you were born into the family business. You may be faced with resistance to any changes as ‘that’s not how things were done previously’.
When taking over the family business it’s important you perform your due diligence. Whilst you may think you know the business you should seek help and guidance from professional family business advisors.
At Alexander & Co. our expert team of family business accountants has a wealth of knowledge and experience to provide you with specialist advice, helping you to continue growing the family business.
Contact our Media City and Manchester accountants today to see how we can help you with this important transition.