One of the specialist areas at Ellis & Co is our work on behalf of family businesses.
We have acted for family businesses of all shapes and sizes, from those starting out to those entering their third or even fourth generation.
Family businesses are a special breed and, over the years, we have advised on numerous issues which are unique to this particular breed of company.
Among the more common challenges facing family businesses are:
1. Different interests
The different interests of family members. Some family members may need dividends to pay the bills whereas others would prefer to see the money retained in the business to expand its activities.
2. Lack of strategy
Often there is no clearly defined strategy for the business as it can be too difficult to get all the family members to agree. Family members will have separate views on risk which affects the decision making process, for example in engaging in new ventures.
3. Succession planning
Succession is often a problem. It may be that older family members are unwilling to step down for the next generation to take over or, alternatively, that there is no clear leader from the next generation to take the business forward.
4. Wrong skills
One of the most common mistakes that family businesses make is trying to shoehorn family members into roles they are ill-suited to, a case of square pegs in round holes.
Over the years, we have seen family members taking on senior roles including managing director, not because they were ideal for the positions, but because they were family.
5. Lack of scrutiny
Another common issue is the unwillingness of family businesses to adopt good management practices, such as key performance indicators (KPIs).
Usually, this is due to a fear that any KPIs will highlight shortcomings among family members.
6. Attracting talent
Finding and retaining great people is one of the biggest challenges facing any business, but in the case of family businesses it can often be accentuated.
Given the choice between a family business and a non-family business, many candidates will choose the latter because they believe there will be more opportunities for career progression where family members are not occupying the top jobs.
“Although there are special challenges that face family businesses, there are also many positives,” said Robert Ellis, director of Ellis & Co Chartered Accountants and Business Advisers.
“Often they benefit from a good trading history, plenty of cash retained in the business and a culture of everyone working together.
“If problems do arise, they can often be overcome by bringing in non-family members to fill the skill gaps. This might be in a full-time executive role, but equally could be in the form of a non-executive director.”
If you are a family business and would like to find out more about how Ellis & Co can help call us on 01244 343504.