Operating a family business can be enjoyable as well as lucrative. Maintaining a family tradition like a pizza shop or a dry cleaning store provides a legacy as much as an income. However, when preparing to take over the family business, it is important to consider the transition from a business perspective and not just as a favor to relatives or a fun pastime.
Set Clear Boundaries
If you plan to take on the family business as a full owner rather than partner, then you will need to transition the company to your sole proprietorship. Consult an attorney about the documents that may need to be filed to make the business officially yours. This may be a good time to change the company name, replace some of the board members with others who share your vision and make modest adjustments to products and services. Although it is fine to accept advice or suggestions from the former family owners, drawing clear but polite boundaries now could prevent problems later.
Separate Personal Finances from the Business Budget
Don’t be tempted to treat a former family business as anything less than a professional endeavor. Combining personal finances with the business budget is not only unethical, but it could also be illegal in some respects. It also creates headaches come tax time. Keep separate sets of records and documents as well as accounts.
Seek Finance for Upgrades
Perhaps you discover that the company needs a cash injection to update operations or enhance the marketing plan, perhaps you need to get some booklets or business cards printed from sites like Printivity, or maybe you need to get some digital marketing like SEO. This is all going to cost money and this is something you can’t turn away from! In this case, consider applying for a business loan. Financial institutions like LendingClub.com offer business loans to family-owned enterprise. These can be used for many kinds of things the company may need as it changes hands from one generation to the next. Decades of profitable business history will help make it easy to get approval, making this an especially attractive opportunity for family-owned businesses.
Avoid Dramatic Changes
Although you may be tempted to change everything you don’t like about the company to suit your taste, avoid making rushed decisions. Take time to get familiar with the business. Review prior records and inspect operations to see how things are working. Unless there is a need for immediate repairs or updates to your business, don’t hurry to spend money or make big changes. There may be many effective aspects of the business that you don’t need to change.
Personalize the Business
To avoid alarming family owners who think the business is perfect, make small but significant changes at first to claim the company as your own. You may want to rebrand certain products, redecorate the shop, or design new business cards. These minor improvements will reinforce your ownership in a non-threatening way to the previous owners without being too overt. Choosing stationery, updating the restrooms, and planting a few shrubs outside may give the business a whole new look at minimal cost.
Taking ownership of a family business is a great way to apply creativity and give the company a fresh new image. Just make sure the transition is thorough, ethical, and complete to avoid problems down the road. This is a good time to find a mentor or join the local chamber of commerce to learn more about similar businesses in your area.