Options for Your Family Business
Every family run business is different, but if you are unsure what to do with yours take notice of these useful tips. However, if you don’t want sole responsibility but you don’t want to sell your business completely, employee ownership could be an option for you.
Author: Charlotte Cobley
Running a family business can be difficult but extremely rewarding, having to put a higher degree of passion and commitment can be time consuming, we have put some tips together to ensure you aren’t the generation that messes it up. But don’t worry there are other options to taking on your family business.
If you know running your family business is what you want to do, then follow these few simple rules and you’ll be on the road to a successful family business:
Using your family members for different roles can be challenging, but remember your all individuals and each person will have more skill in one area than another so delegate each responsibility to the correct individual.
Lack of merit
If you’re worried about the lack of skill your potential employees (family members) and you don’t want to offend anyone, suggesting this is a good way to ensure they want the job and will like the position. Sending ambitious family members into the private sector firms to gain experience of the real business world will give them a better perspective of the future.
Take a break
Working together and socialising together can put strain on relationships, so don’t be afraid to take some time and be alone. Maintain any interests outside work and try talk about other things. If you feel like this there is a high chance your family members feel the same.
Be clear who the boss is
Having half a dozen family members round the board table can be overwhelming, and if everyone thinks they are in charge it will cause chaos. Make sure you have one clear boss.
Even though you are running a family business, you don’t have to keep with tradition. Hire in technology specialist or if you have a technology savvy family member allow them to make some changes.
Running a family business isn’t for everyone, if the responsibility is up to you and you feel the business is in the wrong hands. Talk to your other family members, does anyone else want the business? Or is selling the business the best option?
This has become a popular exit route for family businesses, being able to keep some involvement in the business is a huge advantage. Selling to a trade buyer could mean the business is in danger, due to relocation or down size in favour of another business. Choosing to sell to employees can mean the family can retain involvement in the business small or large.
Firms owned by employees can be more profitable and productive. Research has proven that when employees are happier they will go the extra mile to make the business even better and satisfy the customers. The personal stake in the business is a contributing factor.
Setting up a trust
Trust’s can be set up so the business will be in the hands of the employees, if it is now or in the future, the employees will have the benefits of ownership for when they are employed by the business. It allows flexibility and can be designed to meet the needs of the business. This type of business ownership is called Indirect Employee Ownership; an example of this is John Lewis.
Direct employee ownership
Another way of selling your business to employees is by direct employee ownership. The employees own the business by holding shares. If you are unsure which model would suit your business best, there is a hybrid version of both; Combined Direct and Indirect Employee Ownership.
The future of your family business depends on you and your decisions review and analyse each potential option. Employee ownership is not the right options for everyone, so carefully look at each exit solution that is relevant to your family business.