Do I take on the family business? Help please!(8 Posts)
Just that really, my parents are in poor health and have run a successful business for 25 years. They built it up from nothing after my grandfather left it with a lot of debt and it's gone from strength to strength.
I have 2 siblings who are not in a position to take over, I have a career which is unrelated to the business and I have a very young family. I also need to be the main earner in my household. I fear that if my dad sells it will kill him, ideally if I took over he'd still be there on a casual basis to advise etc.
My concerns are that I have no experience of the industry the business concerns, my career is unrelated to it and also unrelated to the admin side of things. I'd have to quit my job and lose my generous holidays and pension. I know I'd be able to learn the basics about the day to day running, staffing, tax etc and I know they have a reliable accountant and a mentoring service to assist with employee rights and responsibilities. It's kept my parent's comfortable lifestyle for years so I know it would be able to support my family (without any lavish expenses etc) as long as it's thriving.
However, I just can't step outside of the situation far enough to judge whether I'm making the right decision. What is it really like to be self employed? What am I not thinking about? I realise I'll have to be there a lot which is fine, my career is demanding anyway so I'm used to the hours and my childcare would most likely remain as it is. I do have a day off in the week which I realise is a luxury I won't have should I commence with this. Most of the staff are hard working and good at their job although there are a few problem members who I would need to sort out.
I need to make a decision soon, I have a small window of opportunity to go in and experience to properly but then I have to return to my career. I would like to keep the business going as my dad has worked so hard at it all him working life, but on the other hand I don't want to jeopardise my own family and our income/lifestyle.
Any words of wisdom much appreciated! Tia, sorry this is so long.
It sounds like you'd have a big learning curve. Could you run the business successfully or would it sink - which would be even worse for your parents than selling?
Would it be practical to bring in a general manager to run things, with you keeping an overview for the family?
What would your siblings think? Would they expect a share of the profits as their inheritance?
What a dilemma. Fantastic opportunity but I understand it's not for everyone.
Only 9% of family businesses survive to third generation, and family businesses are such an important contributor to the UK economy. (outperforming FTSE companies by 40%)
Where in the country are you? If in England or Wales then these people might put you in touch with someone you could talk it over with. www.familybusinessplace.com/ If in Scotland then these people are great sfba.btck.co.uk/
Your parents could look at a sale to employees - that keeps the company local, you could always have family involvement in the governance structure and there are tax breaks. postlethwaiteco.com/employee-ownership/employee-ownership-trust/?gclid=CIHv5oiAzMgCFSgXwwodI1MLwg
Good luck in making the decision.
Do you want to do it? Or are you feeling obliged to? Have your parents actually indicated they want to give it up?
I would also suggest appointing a manager to run it at least in the short term which will give everyone a bit of breathing space.
Thank you for the replies. Yes, I do want to do it, I'm quite excited about it really but I just have a feeling of being overwhelmed at the moment. My siblings don't expect part of the business as their inheritance but after discussions with my dad it's agreed that should any sale take place we were to split 3 ways. There is also an agreement that my siblings take a cut of the rent that the business will pay to my parents for renting the building. My dad owns the buildings and the company is a ltd company that pays rent. My dad has been talking about giving it up for a long time, he hasn't approached any of us about it directly as he said he didn't want any if us to feel obliged but he's happy I want to do it. So as you see, it's probably not going to make me millions once the costs have been taken out but I think it would keep us as comfortable as my current career.
OllyBjolly thank you for the links, I'm in England and will certainly look at your suggestions. I have never heard of a sale to employees before so I'll have a look. There is a lot to learn. I didn't realise that only 9% survive to the third generation! This is my biggest fear. My dad is well known in the community for what he does, if his name goes then most of the business probably will too so the transition would need to be very slow. I suppose it's about keeping it ticking over for the first few years and then looking at what changes might need to be made.
I like the manager idea.
Thank you for the suggestions, feel free to add more as I have so much to learn!
Sorry but there are conflicts written all over this.
Paying rent to your parents, siblings not interested but taking a cut in any sale.
The business needs to be sold and a clean break with a simple gifting of proceeds from your Dad to the siblings. If done now and he lives 7 years there will be no inheritance tax to pay.
You are thinking with your heart not your head. You need a steady income for you and your family not a risky venture you know nothing about. The risk and potential emotional drain on you could be horrendous.
On top of that if the business starts to fail your parents and siblings will blame you and could destroy your family. It is not your responsibility. By all means help your Dad to sell but nothing more.
On top of that don't be surprised if your Dad continues to 'interfere' once you take over. Its a poisoned chalice.
If you do it there needs to be a proper legal document drawn up with the shareholder rights or you and your siblings drawn up and a proper transfer of property This is not a matter of just seeing how it goes and an informal agreement.
This is the transfer of a business that is potentially valuable. If your father dies you will have to pay IHT anyway. You may not be able to meet that bill and forced to sell and have no job at all. It may end in acrimony between you and your siblings if the legal and tax aspects are not handled correctly.
This is all about emotional decisions but really you would not consider it at all if it were not your father's business and he sounds as if he just doesn't want to really let it go.
Don't do it on those terms! You need a full and frank discussion with the entire family before you move on with this. If you take it on, it needs to be YOURS and nothing to do with your siblings. Your parents need to draft their wills in such a way that you get the business as your share, and your siblings get other assets for their share. The last thing you want is siblings having any say or power in what will become your business.
You also want the business valued by an independent expert so that there are no hard feelings from your siblings thinking you've got it on the cheap. They may think it's worth millions when in fact it could be worth a fraction of that.
You also need to make it clear that once it's transferred to you, you're the boss. Your father will be merely a consultant and his role will be on your terms and that you will have final say. Ex-owners are the world's worst for letting go and will continue to get in the way and undermine you if you let them. He needs a clearly defined role, clearly defined working hours etc. You really, really don't want him popping in and out when he feels like it and making decisions without you knowing what he's up to. He will do exactly that if you let him.
You have to grow a backbone and stand up to your parents and siblings if this goes ahead. If you're not that kind of person, stay in your current job and let someone else run it.
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