Is your limited company a family-run business?

Working with relatives adds an extra dimension to your business. We know from first-hand experience … Spicer & Co Chartered Accountants is a family-run accountancy practice! Some of our clients are family businesses too. Is your business one of the UK’s five million family-run enterprises?

(Source: Family Business UK)

Every family is unique and has its own dynamic and characters that impact the business. Overall there are significant strengths to promote and enjoy, with cautionary issues affecting the company too. With our specialist work and our family in mind, here are the issues to be aware of when working with your family.

Five Advantages of a Family-Run Business

1.Commitment

Family members often have a strong commitment to the business’s success, driven by personal and emotional ties. This dedication can lead to hard work and an ability to overcome challenges.

2. Long Term Perspective

Family businesses usually consider the long term view, with the goal of growing the business for future generations. This can contribute to stability and resilience.

3. Quick Decision-Making

A shared business vision enables family businesses to respond quickly to opportunities and market conditions.

4. Strong Working Relationships

The close-knit nature of family businesses can foster strong relationships and trust among family members and employees. This can lead to a more cohesive and committed team.

5. Flexibility and Adaptability

Decision-making within a family business is often flexible, thanks to fewer layers of bureaucracy and shared goals for the business. This agility can increase proactivity regarding competitiveness and market changes.

Whilst a family-run organisation can harness these strengths, it’s important to note that the nature of these businesses creates some unique challenges:

Four Challenges of a Family-Run Business

1. Succession Planning

Changing leadership and ownership can be complex, potentially causing tension and business instability. Choosing a successor and managing the transfer of power should be discussed and planned in advance. 62% of employees say they would be “significantly more engaged” with their role if they knew their employer had a clearly defined succession plan in place. (Vistage research)

2. Conflict of Interest

Family dynamics may sometimes interfere with business decisions. This is especially true when family members have different visions for the business.

3. Limited Skill Set

Family businesses may face limitations in terms of the skill sets available within the family. This can be a challenge when it comes to implementing best practices and maintaining a high standard of performance. Hiring external talent might be necessary to fill gaps in expertise, but this can be resisted due to a desire to keep the business within the family.

4. Difficulty in Separating Personal and Business Matters

Family businesses can find it challenging to separate personal matters from business decisions, leading to emotional decision-making and potential conflicts.

‘The success of a family-run business relies upon harnessing the unique strengths available whilst proactively addressing the challenges involved,’ says Suzanne Spicer, founder of Spicer & Co Chartered Accountants. Suzanne runs the Dunstable-based accountancy practice with her husband, Steve. She adds: ‘From the specialist support we offer clients and our own experience, I suggest three keys to success: open communication, recognising when to outsource and clear succession planning.’