A family-owned business is defined by Wright Ford Young & Co. as any business in which two or more family members are involved and the majority of ownership or control lies within a family. Today, family-owned businesses are recognized as important and dynamic participants in the world economy. According to the U.S. Bureau of the Census, about 90 percent of American businesses are family-owned or controlled, and they account for half of the nation’s employment and half of the Gross National Product. Family businesses may have some advantages over other business entities in their focus on the long term, their commitment to quality, and their care and concern for employees. But family businesses also face a unique set of management challenges stemming from the overlap of family and business issues.
Issues in Family Businesses
A family business can be described as an interaction between two separate but connected systems—the business and the family—with uncertain boundaries and different rules. Family businesses may include numerous combinations of family members in various business roles, including husbands and wives, parents and children, extended families, and multiple generations playing the roles of stockholders, board members, working partners, advisors, and employees. Conflicts often arise due to the overlap of these roles. In order to succeed, a family business must keep lines of communication open, make use of strategic planning tools, and engage the assistance of outside advisors as needed.
Some of the common issues that family-owned businesses experience include:
- Family versus Non-Family employees, where non-family employees may find it difficult to deal with family conflicts on the job while family members may resent outsiders being brought into the business.
- Determining employment guidelines and qualifications for family members hoping to participate in the business.
- Paying salaries to and dividing the profits among the family members who participate in the business.
- Conflicts among family members with decisions to make the necessary investments into the business for long-term success.
- Determining who will take over leadership and/or ownership of the family business when the current generation retires or dies.
Why is Wright Ford Young & Co. right for you?
At Wright Ford Young & Co., we recognize the highly-personal subtleties of owning and operating a family-owned business, where finances are often interwoven with family cash flow and lifestyle. We understand that the family-owned business usually represents a large share of the family’s net worth and security, which can result in a unique and sometimes volatile mix of business and personal. Because of these dynamics, each generation of the family should feel comfortable with their accounting firm relationship and have complete trust in their tax and financial advisors.
Our partners and staff develop this level of trust by getting to know your family members and their individual goals and financial aspirations. We marry that knowledge with a complete understanding of your general business operations. We assist our family-owned business clients with every phase of the business life cycle, from formation and choice of an appropriate entity, through expansions and acquisitions, to succession planning and planning for transitions and sales. Should an unusual issue arise, we have a large network of outside experts, including attorneys, insurance advisors, investment advisors, appraisers, and other family wealth specialists who can be recommended and introduced as needed by your WFY engagement partner. Through the personal relationship we’ve developed with you and your family, we will ensure that your personal and professional goals are achieved.