Running a family business can be hugely rewarding. But it can also present a unique set of challenges when it comes to keeping your business financially viable and stable. Here are three tips to consider…
1. Plan for succession
Succession planning is a key aspect of any family business. If you have traditionally been at the helm, you need to have a strategy in place for when you want to exit in order to maintain the viability of your business and ensure a lack of leadership and clear direction don’t cause problems for those left behind. It’s also important to ensure your processes are written down so that in the event of an emergency your business can continue to function.
2. Don’t let family ties get in the way of financial stability
It can be easy to let emotions take precedence over more practical issues such as financial security. Just because one member of the family is in charge of the books, it’s still a good idea to have a process in place for auditing accounts regularly and authorising high-expenditure purchases. Enshrining this as part of a new approach to tightening up your company’s processes and adding an extra layer of verification will show this isn’t an issue of trust but about ensuring your company meets its financial targets.
3. Keep things official
Family businesses often develop organically, which means processes and systems can be fairly informal, especially when it comes to handling finances. In fact, many family businesses leave accounting and payroll to one member of the family, often someone who isn’t trained in such matters and may have other job responsibilities to prioritise on top of this. A few quick tips include keeping your personal and business accounts separate as well as ensuring all employees know the procedure for retaining receipts for expenses.
However, if you want to see real growth in your family business, investing in accounting software or outsourcing your accounting can free up your time to focus solely on your business. It also presents a number of benefits in terms of accurate bookkeeping, payroll, and filing of tax and VAT returns to ensure maximum savings and that things function as they should. More accurate accounting also means better financial planning, putting you in a better position to secure future funding for growth.
If the accounting needs of your family business are taking up more of your time than they should, discover how dedicated small business accounting can improve the running of your family business. Get in touch with us at Cornel Accountants today.