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Family businesses are the cornerstone of the economy in Northern Ireland - they cross all sectors and make up almost 60% of private sector employment. There are many reasons why family businesses are so successful, there is family commitment, trust and a real understanding of the business.

A family business is often like the owners first child.  They nurture the business from its infancy, they put all their time and energy into the business and watch it grow and develop.  They’ll also endure many sleepless nights worrying about it!  Owners know their business better than anyone else and they follow their gut instinct when making decisions.

And like a child, there will come a stage where the business reaches maturity, and the owners want it to stand on its own two feet and eventually allow the next generation to take it forward - and this is where the challenges can start!

Before making any decisions about the future, it is important to understand what your vision for the business is.  The next challenge for owners is implementing the vision whilst also trying to manage the family relationships outside the business.  This is where a family-owned business differs to other businesses and owners face many decisions:

• Do family members share your vision? Do they have their own vision for the future of the business and is it compatible with your vision?
• Do the family members involved in the business have the skills and experience deliver the vision?
• If additional skills are required and you recruit a non-family member to work at a senior position, how do integrate them into the business and ensure that family and non-family members operate effectively together?
• How do you retain control and still allow the next generation to develop into their future roles?
• How do you avoid conflict when all family members are shareholders but not everyone is active in the day to day running of the business?
• What happens to the business when you are no longer around?

There are many actions that the owners of family businesses can take now to protect the family business in the future and minimise the risk of conflict between family members.  Agreeing reporting structures and decision-making responsibilities, having appropriate renumeration structures in place and defining the required contribution to the business by family members will help to build an effective management team.  Shareholder or partnership agreements will document decision making process, dividend policies, deal with shareholders who are not active in the business and set out the procedures for resolving conflicts.  Getting specialist tax advice can help you to put effective tax planning strategies in place to reduce the tax burden on family members in the future.

The biggest risk to the success of a family business is doing nothing!

On Wednesday 16^th November from 8am to 10am at the Glenavon Hotel Cookstown, members of CavanaghKelly’s Legal, Tax and Advisory teams will look at the challenges that family businesses face and the steps which can be taken to overcome these challenges.

Register for the seminar here.