Expert view: Family business issues

Shelim Rahman, partner at accountants and business advisors Beever and Struthers, examines issues affecting family firms and professional advice and service to address those problems.

Given the significance of the family business to the UK economy it is alarming to see statistics that only about one third of family business survive to the next generation with many wound up or sold on to larger corporates.

Areas such as succession and strategic planning, remuneration versus reinvestment, can all be potential battlefields, with failure to find a solution that works for all creating casualties beyond the boardroom.

The separation of ownership from management can enhance the ability to lock-in key individuals who aren’t family but will feel valued in the business. A culture based on nepotism rather than a meritocracy based on performance will alienate key performers. Offering directorships and access to long-term incentive schemes such as the EMI share option scheme allows family members and others to benefit from the growth of the business.