Family Fortunes: The Pros and Cons of Family Businesses

Monday July 27, 2015

Setting up in business with family members seems like the low-stress option, and it really can be. Just remember - family business is still serious business.

At RIFT Accounting, we love family businesses. In fact, we're even one ourselves! Family businesses are an enormous part of the UK economy, with over three million of us employing a total of over nine million people across the country. It's a great way to build a strong business, but you do have to keep a few points in mind going in.

For one thing, it's a mistake to think that working with your family's automatically going to make life simpler for you. Whether you're running a Partnership with your spouse or employing a cousin to run your website, the paperwork, regulations and legal responsibilities don't magically evaporate. A business is a business as far as HMRC and Companies House are concerned. In the same way, accepting investment from a relative may seem like an attractive way of grabbing some quick funding, but it's still a proper business transaction and needs to be handled like one.

With those cautionary notes still ringing in our ears, it's time for some good news. Family-run businesses bring some very real benefits with them. So much so, in fact, that they're actually the world's most popular business model, accounting for two thirds of all privately owned businesses in the UK! They tend to be more resilient and flexible when the going gets tough, and can have the advantage in some of the more intangible aspects of working together, such as trust and shared goals.

Of course, those advantages could disappear in a hurry if your family can't get along. If your typical home life plays out like an overwrought soap opera, you might find some of those stresses working their way into your business performance. Equally, it can be next to impossible to avoid "bringing your work home with you" if you actually work from home - or at least with the people who live there. The strengths of a family business are many, but if they come at the expense of your most important personal relationships then that might not be a good trade to make.

If you're running a family business or thinking of starting one, you should take a look at Kent's very own Family Business Place website, where you'll find support, articles and organised events geared toward helping family businesses thrive and grow.

RIFT Accounting understands the challenges and opportunities of running a family business, because we've been there too. We're always here for help, guidance and advice, so get in touch - and watch this space for more Voices from the RIFT.

Call us on 01233 653006 and see how we can help you today.

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