At some point, every family owned business is going to face some significant challenges. By their very nature, any family-owned business can draw emotion into the decision making and lead to big expectations and sometimes big let-downs. At times, making the best decision for the business is not the same as making the best decision for the family and vice-versa. Here are a few tips to try to help you avoid some of the pitfalls of a family- owned business.
1. Don’t Turn it Over Too Soon
Perhaps you have been running a family owned business and your child or children are actually excited about taking it over someday. If things are going according to plan, that is wonderful. Just don’t rush it.
If you push a child into a management position or the owner’s job too early, it could be bad for them and the business. Take your time and make sure that everyone is ready for the challenges that they are being given the chance to face.
2. Don’t Force The Family Owned Business on Anyone
Sometimes a child won’t be interested in taking over the family owned business because they may have different interests in their careers. Unfortunately, things don’t always work out the way we dream. With that in mind, forcing your dreams on your children or younger relatives is a sure fire way to cause frustration on both sides.
Remember that the purpose of a family owned business is to create opportunities for your family, not to force them on them. There are always other options than just handing down the business to a descendant.
3. Don’t Rule Out Selling as an Option
Sometimes selling the family owned business is the smart move to make. For example, if you own a business that is diminishing due to changes in the economy or technological advances, it may not be around for your grandchildren no matter how hard you try.
On the other hand, if your business is successful, but nobody in the family wants to run it, selling may be an acceptable and profitable option for everyone involved.
4. Holding the Business is an Option As Well
Perhaps your kids don’t want to take over the family owned business but you want it to be available in case their kids or even their descendants farther down are interested in running it. In this case, setting up a holding company to maintain ownership of the company and keep it in the family while someone else manages it may be the way to go.
Remember, running a business successfully does not need to be complicated. Keep it simple!
For more information on business analysis, business planning, and ways to grow your small business profitably, please check out our website www.portalcfo.com. Follow us on Twitter @portalcfo
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Manny Skevofilax is a consultant and speaker that helps his clients successfully navigate the challenges of growing their businesses profitably. Since 2003, Manny helps businesses enhance their results by using his experience in strategic planning, financial statement analysis, operations, organizational development, and team-building. His consulting firm, PORTAL CFO Consulting, Inc., has attracted clients from diverse industries in the United States and abroad.
Manny can be reached at 410-808-3441 or via email at manny@portalcfo.com.