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Family Businesses often start with the best intentions. Someone has a great idea, it’s shared and over time develops. Family members pitch in, and, with commitment and hard work, to everyone’s delight, pride, and joy, it takes off! Congratulations if that is your experience! 

In this early stage, on the wave of excitement, Business structure and frameworks are often less formal, even casual. Arrangements are formed on ‘we are family’ and that is enough to tie the bonds and loyalty of doing the right thing by all.  

This may work well to begin, but as the operation grows, the Business and members can face challenges and issues they didn’t anticipate. Does that sound familiar to you?   

Consider the following scenarios. 

Scenario 1: Mary buys into a local ‘gift shop’. This is something she has always wanted to do, operate her own small Business. She loves trinkets and treasures, retro design and stocks that little gift to suit every occasion. Mary, with her family, husband Bill and daughter Amy, have invested their time and money.   Mary manages and runs the Business. Everything is going well, and everyone is happy! 

Scenario 2: Same situation.

Daughter Amy has aspirations to grow and expand the Business. A vision she wants to see come to fruition. Mary has no desire to explore this and has dismissed the idea. Bill is sitting on the fence! Amy is talking about withdrawing her funds and self from the enterprise. Tension is building, and communication is difficult. It’s becoming a no-win situation. 

Solution: Part of due diligence in setting up a family Business is to ensure it is structured in a way that protects the best interests of all. A Business built on strong ‘formal’ legal foundations helps protect both individuals and the Business longevity.  It’s important to understand which structure best suits your Business and members' interests. 

Need advice. Contact Blackburn Accounting, your Family Business Specialist. We offer solutions to the following issues. 

Succession Planning, Financial structures, Strategic Planning, Resolving conflicts, Family remuneration, Retirement and Estate Planning.