In praise of family business… plus some of the potential pitfalls
Rob Cockle is keen to use his skills and experience in risk management and insurance to help guide his passion for family business. Mr Cockle set up the Business Insurance Partnership, to provide what he calls a local broker plus service to the businesses of Gloucestershire. His own, and many of his clients’ businesses are family-owned, and that has given him a clear insight into what’s great – and what might not be - about family firms. “Family-owned businesses are the beating heart of the UK economy,” he said. “There are three million family-owned business in the country, that’s 66 per cent of all private businesses. “There are nine million plus jobs associated with the sector and it generates more than a trillion pounds of revenue each year. “Characteristically, there is a massive amount of employee loyalty, for obvious reasons, and they have huge passion for the products and services they provide. “There are massive pluses to family-owned businesses, but there are potential pitfalls as well and often these can go unnoticed until they really hit.” Mr Cockle has created a seven-point list of those potential pitfalls and his advice about how to steer clear of any trouble. Relationship trouble Business relationships are complicated enough, but when you add a family dynamic as well there is far more that could go wrong. In my experience, family-owned businesses believe they are less likely to fall foul of relations souring, but in practice the reverse is true. The key is to leverage the family dynamic, that passion and togetherness to make it work for the business. How do you take that positive energy into a successful business? Family roles and business roles may differ, a son or daughter who is managing director may employ a parent, who is the head of the family.
So, to have clearly defined and communicated business roles and responsibilities. One of the best ways to mitigate any problems (especially for a growing business) is to bring in independent non-family members for key roles. it’s important
Hiring, firing and disciplining your family members can prove to be a problem. You must be fair, and even-handed, whether dealing with a family member or not. Informality of business plans and policies Families aren’t highly-regulated by nature, you don’t tend to have a written contract for who does the shopping, cleaning or washing the car. That informality can often carry over to the workplace and prove to be dangerous as, often, families have more assets linked to their businesses than they do their private worlds. A lack of business plans and solid plans can prove a problem and lead to business failure. It’s vital to invest time into proper planning and producing clearly-written policies. The nirvana is to balance the business and family goals to ensure that the goals are mutually achievable. Succession planning It’s vital that there is a plan in place in case the worst happens. If there is a serious illness, injury or at worst, a death, is there a plan in place for what happens? There needs to be some dispassionate thinking here, based on the competence and abilities of the person who takes on the role – not just the heir apparent in the family. If there is an heir apparent, make sure they are up- skilled and ready to take on the responsibility if the worst happens, so you are prepared at all times. Also, think about the cost of having to buy out a
66 | February 2020 | www. punchline-gloucester .com
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