The Ins and Outs of Family-Owned Businesses

Do strong family ties create a strong business? Maybe so, when you consider that some of the biggest and most successful companies are family-owned: Forbes, Inc., Ford Motor Co., Playboy, Gucci, Carnival Cruise Lines, Harley-Davidson and Tootsie Roll, to name just a few. Is the built-in family dynamic responsible for the success of these companies? Probably. Family-owned businesses owe their success to a number of factors. An experienced Monmouth County business lawyer can get you started on your own successful business tract.

Is Your Family Cut Out for Business?

Almost anyone who has worked in a family-owned business will tell you that it offers distinct advantages over a traditional work environment. Freedom, flexibility, early exposure to the workplace and a built-in relationship with management are some of the instant benefits. However, what happens when management does not allow family-employees to grow and possibly assume management? Not only is the employer-employee relationship tested, so are family ties.

The family-owned businesses mentioned in the opening paragraph have clearly defined the roles for employees. They have identified succession issues, which help preempt sibling conflict, and they have rooted their family values and traditions into the business itself. The result is a continuity handed down to the next generation of family workers.

Family-owned businesses also provide an excellent training ground for the younger family members. Many of today’s successful CEOs tell stories of working in the family business as a young boy or girl. This early start gave them first-hand observation of client contact and taught them the value of money. This also gives family-owned companies an advantage when it comes to succession planning. They can plan early for who will play what role in the later years and can offer a generation of training and supervision. Non-family businesses do not have the advantage of long-term succession planning.

Most family businesses have a substantial amount of family assets tied up in the business. This is where estate planning becomes just as crucial as business planning. Ideally, the business wants to minimize taxes at the time of the owner’s death. This keeps the resources within the company, and keeps the business going.

Successful family companies have surrounded themselves with trusted advisors. Accountants, attorneys, financial planners and family business advisors are valued resources. Whether your business is family-owned or not, professional planning and advice are crucial. Contact a Monmouth County business attorney for experienced advice and guidance.