Family Businesses – Planning for the Future
Cumbria is home to thousands of family businesses which have been trading successfully for many years and continue to remain independent. For others massive growth has transformed them over the years and the owners have successfully sold their business to national organisations.
Saints have been advising family businesses on how to grow profitably for generations and have helped many achieve their goals through increased profits or successful disposals.
What follows are the key issues which we believe any successful family business must address.
What are the long term objectives of the family?
1. Stay a family business?
2. Sell the business in the future?
Which of the following best describes the family attitude?
1. The business must come first?
2. The family must come first?
3. A mixture of 1 and 2, but which is most important?
Do all the family want/need involvement in the business?
1. Do family members want to work for and contribute to the well-being of the business?
2. Do any family members just want an income without working for it?
3. What are the qualities needed for family members to be admitted to the business?
4. How far does “family” extend?
5. How do business duties get allocated to family members? How will they decide who will be in charge?
6. How are the salaries and other benefits to be decided?
7. How will family members performance be judged and by whom?
8. What action will be taken if family members fail to perform?
What are the family views on ownership of the shares or assets in the business?
1. Do they consider their holdings to be an investment which they can turn into cash? If so does the rest of the family know so that plans can be made to deal with this?
OR
2. Do they prefer to think that they and their successors are just holding the shares / assets for the next generation and that as long as they remain active and interested in the business these should not be sold? Again – does the rest of the family know and are the present owners making provision for their independence in retirement (eg. pensions)?
3. Who should own the shares / assets – when and in what proportions? What about future generations? Should family be entitled to own the shares / assets if they don’t work in the business?
4. Should all the shares have identical voting rights and what about a dividend policy?
Next generation management
1. Who selects the Chairman or Managing Director / Partner and how?
2. When/how should that change take place?
3. What involvement does the present owner management want in retirement and when?
Family relationships
1. Should family meetings take place to discuss these matters regularly?
2. How else should the family try to make sure that everyone respects and supports each other?
3. Would a non-family Director be useful at Board meetings?
If now is the time for you to discuss the above, then please telephone your contact partner at Saints or ask to speak to a partner at your local office.
