Running a family business in 2023: What do I need to know?
If you’ve recently been appointed manager of a family business, it might feel like there’s a lot to take in. Moving operations into new industries or offerings might be out of the question, so you’ll need to be able to adapt to the unique challenges presented in a family corporation.
With the UK economy expected to be in recession until the end of next year, it’s crucial to keep operations as smooth as possible – even if you’re new to the dynamic.
What are the unique challenges of running a family business?
Running any business is challenging – and throwing family members into the mix only complicates things. To manage one successfully, each business partner involved must adapt and rise to challenges, which often can’t be overcome without resolution and teamwork. These might include the following.
Colleague relationships need to be maintained and nurtured in any company. In most family businesses, working relationships are formed and supported by love, trust, and affection. When negative emotions arise – including jealousy, rivalry, or resentment – serious issues could brew within the business. Make sure you’re equipped with the right tools to help you manage stress at work.
Traditionally, family businesses might be handed over to the eldest sibling. When an important position is passed through inheritance, it’s possible that multiple heirs could still be operating at various other levels in the business.
Responsibilities and pay
Immediate family members might believe that they’re more involved and responsible for company proceedings by association. If the business employs other staff who aren’t part of the family, pay awards could start to become biased towards relatives.
You’ll need to sign and complete relevant paperwork. Businesses with high levels of responsibility, including clinics and pharmacies, could obtain comprehensive pharmacy insurance in case of unforeseen circumstances.
In any non-family business, management and ownership positions are appointed on a basis of skill and a demonstrated ability to carry out the role successfully. However, in a family business with success from one generation to the next, the family name might take priority.
If younger successors aren’t as equipped to carry out the role, the future management of the business could be on the line. Family succession issues should be treated with a realistic view, avoiding appointing ineffective management.
How do I hand over a family business?
As you head towards retirement, you’ll need to make sure the company is left in capable hands. Firstly, you’ll need to establish who can take the lead.
Try to instigate an open conversation about how your children (if you have them) may or may not be prepared to start running the business. It’s crucial to be able to decide whether you should pass on responsibility, sell up, or change ownership.
You should consider the financial implications. Writing a will could provide you and your family with the peace of mind that the business will be taken over as you intended. You should also consider inheritance tax in the process, making sure to work closely with an accountant.