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3 unexpected challenges family businesses could face, and how to overcome them

Family businesses were the bedrock of Ireland’s recovery from the Covid-19 pandemic, the Irish Times reports. In 2021, the newspaper said that this sector, which makes up around 75% of the country’s businesses and generates around 50% of its wealth, has “proved very resilient in its response to both Brexit and the pandemic”.

If you own or run a family business, it’s likely that you have already faced up to challenges, whether that’s Covid-19, a change in your trading relationship with the UK, or the cost of living crisis. Yet in today’s changing world, there could still be unique challenges that take you and your family by surprise.

Knowing about these hurdles won’t stop them from existing. Nevertheless, being prepared can make all the difference to how you handle them over the long term.

So, here are three unexpected challenges family businesses could face, and how to overcome them.

1. Your work-life balance could suffer in a family business

As we have frequently observed from clients we have worked with, family companies often fall prey to a common “curse”: a lack of work-life balance.

Indeed, it is almost impossible not to take work home if you sit around the dinner table with all your colleagues every night. But if you aren’t careful, a lack of work-life balance can lead to both personal and corporate issues – including cases of burnout in your team.

According to a survey published by Irish News in July 2023, overworking among small business owners is rife. The research revealed that:

  • 18% of small business owners did not take any holiday within the first two years of starting their enterprise
  • 60% said they worked more hours than when they had a regular job.

Pair these statistics with the work-life balance issues family businesses can face, and the chances of you and your loved ones experiencing burnout seem high.

Fixing your work-life balance problems won’t happen overnight. As such, forming habits as a family unit, and holding each other accountable, can be hugely effective.

A few ways to help enforce a healthy work-life balance are:

  • Having strict office hours, and sticking to them
  • Regularly checking in with other family members who seem stressed or overloaded
  • Investing in workplace benefits for everyone, including access to mental health support and health perks.

Starting with these, you could find your family business maintains healthier boundaries between work and life.

2. Your personal and corporate succession plans could become blurred

It’s likely that, as you approach retirement age, you have already considered what your business might look like in the future. You could wish to sell up when you retire, wind things up entirely, or pass the torch down to the next generation.

One unexpected challenge many family business owners could encounter is that your corporate and personal succession plans are likely to be woven into one.

While there are advantages to thinking of both sides of your wealth as one big picture, blurring these lines could also mean you lack the perspective you need to plan for the future.

For instance, your personal plans will likely involve:

  • How you will fund your retirement
  • When you want to stop working
  • Looking at the tax, including the Inheritance or Capital Acquisitions Tax (CAT), your loved ones might pay when you pass away.

At the same time, you’ll be looking at your corporate legacy plans, which may include:

  • Whether you’d like to sell your business or pass it down to a younger family member
  • When you would like to make this transition
  • How you’ll use either the continued revenue from your business, or the funds from a sale, for both your retirement and your children’s inheritance.

Seeing your personal and corporate wealth as separate entities can be challenging when your whole family is involved in your business. While these two sides do overlap, forming distinctive plans for each one can put your mind at ease when you retire.

3. Working as a family unit could alienate other employees

One of the greatest things about working as a family unit is that you have a lifelong, trusting relationship with your colleagues from the outset. Starting a business together means you already know about each other’s strengths, weaknesses, and personalities.

However, when you expand your family business and hire employees from outside the fold, it’s important to understand how your dynamic could look and feel to others.

For a new employee, there may be some benefits to working for a family business, including:

  • A friendly team that forms a united front when tackling issues
  • A non-corporate, relaxed working environment
  • Genuine care and concern for employee wellbeing.

On the other hand, employees could experience the following downsides when working for your family business:

  • Not feeling like “part of the gang”
  • Being (unintentionally) locked out of important business conversations, especially if these often happen at home.

Fortunately, recruiting non-family employees into your business could serve as a reminder that work and life are separate entities.

If you’re hiring outside of your family for the first time, it’s important to consider the feelings of these new employees from the outset. Creating strict policies that apply to everyone, and keeping work conversations in the workplace, could be a great place to start.

Making these improvements can help you create a more equal, professional environment that treats everyone fairly.

Get in touch with us for financial advice that works for your family

Here at iQ Financial, we specialise in making life easier for family businesses. We believe that your long-term wellbeing and your life goals come first – your wealth is the vehicle, not the driver.

If you wish to discuss your family’s goals with a financial planner, email us at clients@iqf.ie, or call 353 71 915 5560.

Please note

This article is for information only. It does not constitute advice.

It describes financial planning services that iQ Financial can offer to you. Financial planning services are not regulated by the Central Bank of Ireland.

Get in touch

Please contact our team if you have any questions or want more information about the services that we provide to business owners.
071 915 5560 clients@iqf.ie

50 John Street,
Sligo,
F91PP3X