How to Take over a Family Business
Review the benefits., Recognize the risks of taking over a family business., Get a third-party valuation of the family business., Consider your family, lifestyle and career., Make a holistic decision.
Step-by-Step Guide
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Step 1: Review the benefits.
There are a range of benefits that come with taking over the family business, such as the pride of maintaining a family legacy and starting your career ahead of the game.
Some of the numerous benefits include:
You’re not starting from scratch.
You get the existing talent and knowledge of longtime employees.
The business already has cash flow.
You get to continue the family legacy. -
Step 2: Recognize the risks of taking over a family business.
There are many risks involved in taking over a family business, which range from obvious financial risks to career and personal risks.
Give yourself some time to consider the various risks, which you may want to discuss with a trusted mentor or family business consultant.For instance, you may want to review the following risks:
Fighting between family members about the buyout.
Your family business does not have the reputation you had expected.
The initial financial investment is not economically viable.
You can’t define your own career path and identity.
You may not have the right set of skills or leadership style for the company. , To find out whether it is worthwhile buying the family business, you should get it appraised by a third-party from outside the family.
Often, people within the family will either under or overestimate the value of the business.
As such, a third-party valuation will help determine whether it is a good decision to purchase the family business and, if so, how much you should pay for it.You should look for a firm that specializes in the acquisition and sale of businesses.
Look for one in your region by searching online or asking people in your business network.Paying for the cost of the third-party valuation is subject to negotiation between the buyer and the seller.A professional valuation also keeps everything fair, allowing your family to avoid any possible regret or suspicion after the completion of the sale.Take the current financial sustainability of the business into account when you make your decision., You should take your life and career into account when deciding whether to purchase or take over a family business.
If you are at the start of your career, you may want the chance to define yourself and your career outside of the family.
If you like living in a major city and the family business is located in a rural area, consider whether you are willing to change your current lifestyle., Taking the benefits, risks, current financials, family dynamics and your own career into account, make the decision that is best for you.
You should discuss the matter thoroughly not only with your partner and family but, also, with trusted advisors or even business consultants.Ask a friend in your business network for a consultant recommendation.
Use an online business consultant search tool to find a consultant.
Consultant search websites may allow you to search by sector, region and area of advice. -
Step 3: Get a third-party valuation of the family business.
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Step 4: Consider your family
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Step 5: lifestyle and career.
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Step 6: Make a holistic decision.
Detailed Guide
There are a range of benefits that come with taking over the family business, such as the pride of maintaining a family legacy and starting your career ahead of the game.
Some of the numerous benefits include:
You’re not starting from scratch.
You get the existing talent and knowledge of longtime employees.
The business already has cash flow.
You get to continue the family legacy.
There are many risks involved in taking over a family business, which range from obvious financial risks to career and personal risks.
Give yourself some time to consider the various risks, which you may want to discuss with a trusted mentor or family business consultant.For instance, you may want to review the following risks:
Fighting between family members about the buyout.
Your family business does not have the reputation you had expected.
The initial financial investment is not economically viable.
You can’t define your own career path and identity.
You may not have the right set of skills or leadership style for the company. , To find out whether it is worthwhile buying the family business, you should get it appraised by a third-party from outside the family.
Often, people within the family will either under or overestimate the value of the business.
As such, a third-party valuation will help determine whether it is a good decision to purchase the family business and, if so, how much you should pay for it.You should look for a firm that specializes in the acquisition and sale of businesses.
Look for one in your region by searching online or asking people in your business network.Paying for the cost of the third-party valuation is subject to negotiation between the buyer and the seller.A professional valuation also keeps everything fair, allowing your family to avoid any possible regret or suspicion after the completion of the sale.Take the current financial sustainability of the business into account when you make your decision., You should take your life and career into account when deciding whether to purchase or take over a family business.
If you are at the start of your career, you may want the chance to define yourself and your career outside of the family.
If you like living in a major city and the family business is located in a rural area, consider whether you are willing to change your current lifestyle., Taking the benefits, risks, current financials, family dynamics and your own career into account, make the decision that is best for you.
You should discuss the matter thoroughly not only with your partner and family but, also, with trusted advisors or even business consultants.Ask a friend in your business network for a consultant recommendation.
Use an online business consultant search tool to find a consultant.
Consultant search websites may allow you to search by sector, region and area of advice.
About the Author
Susan Thomas
Brings years of experience writing about creative arts and related subjects.
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