EXPERT OPINION RETAIL BUSINESS?
and people feeling that they can openly and freely be honest. Often, this isn’t the case, especially when family is involved. That’s why Families in Business exists – so we can be a neutral facilitator and start the process. Emotions are often at the heart of this and can cause tension and challenges. If you have a good lawyer or accountant they should be encouraging you to start discussing these things.
What if there is no obvious succession plan If no family or staff member wants to take over the business what do you do with the assets? Most people don’t really under- stand what their true assets are so that’s something that needs some thought. There are a number of options, which include selling – to a supplier or competitor or open market, liquidating assets, employ- ees buying the business and so on. The most important thing is to plan early. To optimise the value and opportunities that exiting can create, it is vital to prepare well and sometime make some changes. It’s rather like deciding to sell your house and freshening up the paintwork; removing the purple walls and replacing them with magnolia. How can you be appealing to the market? There are advisors who you can talk to about preparing the business for a next step. I would encourage you to consider the implications for you on various levels, emotionally (as you’ve invested many years in the business), physically (what will you do with your time) and financially (take good tax advice and financial planning).
If there is an expectation of you taking on the business how do you negotiate?
For family or employees looking to take on the business, whether as a buy-out or otherwise, my advice is to create a proposal for the incumbent business leader. This process is something I did and was hugely valuable to me. The report should include your understanding of the business his- tory which is key to the future and shows a respect for the legacy and culture of the business. It should look at the market, how it is and
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how it will change – answering many of the previous points. It would need a business plan for the next five years with financial understanding. It should have a plan for transitioning and include a piece that looks at advisors, support etc, which any new leader should be open to. While this report will be useful for the business and to a founder, its main importance will be to the author.
Helping to consider and find out information will be a key skill they will learn.
What legal issues need to be prepared for in the event of an unexpected death?
It’s not just legal issues that need to be considered if a senior person suddenly passes away (or is unable to act e.g in a coma) or simply leaves the business; I would recommend seeking appropriate legal advice about this though.
Things to consider will be the day-to-day running of the business, accessing the bank and computer systems, etc, the family’s involve- ment, ownership implications, the company’s Articles of Association, shareholder agreements and cross options, wills, power of attorney, trusts, taxation, insurances and key man policies
As you can see, there’s a big list and this isn’t everything and so this really must form part of the future proofing discussions and plans – just in case!
It’s worth remembering that family businesses are more precarious in such situations because co-owners could be travelling together in the same car, for example, and that, if not openly understood, family could fall out of expectations, ownership, wealth and so on, which can impact the legacy and future of the business – and relationships.
When it comes to siblings running the business, what happens if the relationship becomes acrimonious? Unfortunately, we encounter this from time to time along with challenges between generations, in-laws, step children, and so on. We always work to see if we can realign people first and that is often possible, however, sometimes other options need to be found.
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My advice is always to work with everyone, even in a one-to- one capacity, if relationships have broken down irretrievably. It is essential that everyone (inside and outside the business sometimes) feels heard and involved.
This way it creates the best chance
for relationships in the future. It’s worth bearing in mind that the trigger is never the real trigger and there’s always emotions and history that are unresolved – that’s where we help.
FUTURE PROOF YOUR BUSINESS
• Start future proofing from day one • Take a step back and look at the bigger picture • What is the purpose of your business: lifestyle, social status, pass on or sell?
• Consider needs of your most important relationships: who might like to step up?
• Understand business strategy and ensure it does not rely on one key person; who will own shares, run the business?
• Think about factors that could impact your business positively or negatively eg economic conditions, key employees leaving etc • Create proposal for incumbent business leader
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