Families, you can’t live with them or live without them. Could you work with yours?
It’s a tradition that has spanned the centuries and today two-thirds of small businesses in the UK are family run. Not only have family businesses shown dogged resilience throughout the centuries, they have also shown great strength through the recession.
Family businesses employ nine million people, contributing nearly a quarter of total UK GDP and provide over £81bn in tax to the Exchequer.
So it seems like some companies have a lot to learn from family businesses. Family run businesses are less likely to go bankrupt as they are formed from a wide range of directors and shareholders. Their formation represents diversity and a wide range of skill sets, as well as having a greater balance of gender- most having at least one female director on the board.
Family businesses also represent stability as they don’t suffer with a high turn-over of staff like some corporate businesses do. Additionally, family run businesses tend to be more frugal with their spending and are fixed on achieving success to a greater extent. It is not just their livelihood at stake but all the family’s income.
How to make it work…
- Transparency– make sure everyone is aware of the latest developments and who should be completing a certain role. By hiding away details arguments could emerge.
- Work-life balance– whilst your business may feel like your world, remember that enjoying a life outside of work is crucial for all members of the business.
- Succession plan– many businesses don’t have a succession plan for the next generation and that perhaps explains why only 10-15% of businesses continue past the third generation.
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To ensure your business stands the test of time make sure you have an open mind in terms of expansion and development. Without this forward thinking some businesses crumble. In most cases the dominant, overprotective elders won’t let go of their traditional views, at a detriment to the business. For a secure future, a respectful balance of the older generation’s experience, combined with the younger generation’s innovation needs to be found.
Here are some examples of businesses that have flourished under the familial fold;
- Mars: remains a family company and its board is made up of Mars family members. The company began in 1911 when Frank C. Mars started selling homemade confectionary from his Washington home.
- Walmart: the world’s largest retailer and owner of ASDA was founded in 1962 by the Walton family. Despite its extensive growth worldwide the Walton family still control 48% of the company.
- Volkswagen, L’Oreal and Aldi are to name a few of the top family businesses in Europe, holding 32%, 30% and 100% of the business respectively in family ownership.
So working with your nearest and dearest can be done and be done well. To find out about company formation, or to receive professional advice from a business accountant contact Wisteria today.
Blog supplied by James Cartwright of Wisteria.
Wisteria Chartered Accountants and Business Advisers are an independent firm of specialist tax accountants and Chartered Tax Advisers, based in London. The company provides a wide range of services to businesses, including tax compliance and tax planning services. Wisteria is a member of the Institute of Chartered Accountants and the Chartered Institute of Taxation.