The importance of family businesses to the UK economy is well documented. Most people also know that comparatively few of these businesses sustain into a second, let alone third generation. So if they are so valuable why do so many fail to survive?
There is no simple answer and no one size fits all solution. Aside from external factors such as increasing competition and changes in the market, there are some self-generated reasons that a business is not handed on to the founder’s children and these are usually grounded in lack of planning, failing to ask the right questions and not understanding the true nature of the challenges that obstruct future-proofing the business.
To pass on a business to the next generation, it needs to be in good financial shape. It needs to have been run profitably and with sufficient cash reserves to give the new generation a fighting chance. This will require a wealth management strategy which should include a succession plan that all parties can sign up to and a thorough understanding of the assets the business has that form the basis of its wealth.
Very often business owners don’t realise what assets they have, let alone what they plan for them. Knowing where you are today, understanding the vision for the future, along with the purpose, will allow us, as experienced family business advisers, to create a suitable road map to ensure decisions are taking the business in the right direction.
Future plans need to be understood by all the family members involved in the business. The protection of family wealth does not lie with one generation and an active role may be needed by members of each generation. This will require a clear understanding of the values and the wealth management goals that family members want to achieve.
Every family business is unique and each requires different solutions to the challenges they face that are tailored for their individual needs. Our 360 degree business review service Family Business Connect has been specially designed to assist family and owner managed businesses access understanding, support and guidance.
To begin to look inside your business with a little more clarity and confidence, now and into the future, get in touch with one of our Family Business advisers at PKF Francis Clark and arrange your initial Family Business Connect Review.