Family Businesses: Governance, planning and continuity
Family Businesses are estimated to contribute 70 to 90% of the world’s GDP (Tharawat Magazine, Volume 22, p. 36 via gvsu.edu), and generally outperform non-family businesses by 6.65% in the US, and by at least 8% in Europe (Poza 2012, p.3 via gvsu.edu).
Businesses of any size that are owned and/or managed by a family have operational needs all their own that an independent accounting firm, as an unrelated, unbiased third party, is in a unique position to address. These include:
- Governance and offices
- Succession planning
- Business continuity
- Private wealth management
- Philanthropy and values
- Next generation education and transition
Our advisory team can help a Family Business at every stage of its growth by providing insights and recommendations for staying on the right track at the right pace toward business growth.
To be of optimal assistance to Family Businesses, advisors must become, so to speak, “part of the family”—gaining a deep understanding of the relations between family members as well as their overall business goals. It falls to the CPAs on an advisory team to help the family, regardless of these relations, to run the business formally and objectively.
Growing in the present.
Objective management may involve helping family members make unemotional business decisions such as those involving promotions, salary adjustments, and non-family team members. This makes an advisory teams’ interpersonal and communication skills about as crucial as its accounting and management expertise.
In this respect, our team may be called upon to assist at family conferences or with conflict resolution. But even while helping to administer the Family Business in its private aspect, our advisory team also assists in solidifying the Business’ market position with services that include valuation and regulatory compliance.
Planning for the future.
Only 12% of Family Businesses survive into the third generation, and just 1% make it to the fifth generation (Conway Centre for Family Business via accaglobal.com). This makes planning essential for Family Businesses looking to pass management as well as assets on to succeeding generations. Such planning includes:
- Succession planning
- Risk management
- Estate planning and trust
- Contingency planning
We believe in starting on planning as early as possible to facilitate the transition process when the time comes. Should there be no succeeding generation to take over the Family Business, our team can also help facilitate the transfer of power to a board of directors, for instance, or the sale of the business.