In case of an owner’s death or retirement, various policy, cash flow, and management decisions must be taken and planned for; this is known as succession planning. 

Simple Business, Simple Family 

In this model, the successor’s role is clear and unchallenged, siblings do not get involved, and the family’s commitment and heritage contribute to the firm’s success. 

This model has worked well, but it is vulnerable as it places all bets on one candidate. 

Businesses like this are focused, with a concentrated family structure. With only a few family members involved, they do not need complex policies for the business. This type of family business is not diversified or complex and benefits from centralised management. 

Simple Business, Complex Family 

These types of businesses are also relatively simple, but many family members, instead of just a couple, are involved in the management and ownership. 

A family constitution that clearly sets out values and policies for how the family owns manages, and relates to the business is helpful for these types of firms. 

Complex business, simple family 

Firms, where the owners typically have small families and big markets to play in, fall into this category. 

With only a few family members involved, it is important to professionalise this type of business to limit its dependence on scarce family talent. 

Merit-based leadership and mature corporate governance are minimum requirements. 

Complex Business, Complex Family 

Managing firms where the business and the family have large complex structures requires significant investment and effort in governance systems to succeed. 

This type of family business needs mature and practical policies that set clear expectations for leadership and engage development programs to enhance leadership talent. 

New leaders may be inexperienced, unprepared, and have a different approach to leadership than their predecessors. 

Succession planning is essential in ensuring that the business is handed over to new management smoothly and seamlessly. Lanop does this by adopting efficient measures to minimize tax obligations, submitting and compiling accurate paperwork, and completing compliance with HMRC and Companies House.

50% of all family-operated businesses fail to take off, and this figure is at 90% for restaurants, rather alarmingly, I would say. External advisors are often seen to play an essential role in the growth and sustainability of small and medium-sized enterprises. Companies use an external advisor to mitigate deficiencies they face due to a lack of internal resources. Family firms often exhibit certain characteristics that affect the need for external advice. 

Lanop holds explicit knowledge regarding accounting standards and processes and the tacit knowledge to apply them in the business world. Such knowledge is a valuable resource as it takes a considerable amount of time and effort to attain. If a firm does not employ an internal accountant, the decision to outsource external accountants enables the firm to overcome the problem of having limited resources. 

Research has established that family firms have distinct deficiencies relating to human capital. This deficiency arises from their tendency to recruit from within the family, restricting their pool of potential employees. 

Lanop helps your family business last forever. Our family business specialists advise and guide clients on a wide range of financial issues, including VAT registration and submissions, payroll and PAYE processes, HMRC tax investigations, and tax planning, among a multitude of others. 

Services offered at Lanop 

1. Estate and wealth management
2. Business financial planning
3. Management succession
4. Owner and exit transition strategies
5. Tax minimisation
6. Governance
7. Strategic planning
8. Inheritance tax planning
9. Business and Company valuation
10. Personal Finance Planning 

Lanop Accountants eliminate the need to search for an all-encompassing accountancy firm. Our corporate headquarters in London provide practical and efficient solutions to all your accounting needs. 

Our skilled tax and finance professionals work diligently to make your life simpler by reducing financial stress and making business models more lucrative and efficient in accordance with up-to-date regulations. 

Family-owned businesses in the UK may encounter several challenges, including: 

1. Succession Planning: Ensuring a smooth transition of leadership and ownership to the next generation. 
2. Conflict Resolution: Managing family disputes that can impact business decisions and relationships. 
3. Professionalization: Adapting to modern business practices and professional standards. 
4. Financial Management: Addressing potential conflicts over money and distributions. 
5. Talent Attraction: Competing for skilled employees against larger firms. 
6. Long-Term Vision: Aligning family members’ goals and visions for the business.