Question

There is a young entrepreneur who is looking for a loan to buy her aunt and uncle’s dry-cleaning business.The potential entrepreneur is only twenty-seven but has worked hard and saved 20 percent of the cost of the business. The business has been quite successful and established for the past 17 years. Because the owners want to retire, they need to sell the business in its entirety at market value. There are two other family members that work at the business; however, one is also thinking of retiring soon, and the other has some past credit issues and cannot finance the business. Therefore, neither of these employees is in a position to consider taking over the business. Based on the information provided, what advice would you give this entrepreneur about buying a family-run business? Give three recommendations for an entrepreneur in this situation.

Answer 1

1. Communicate. Families have their own way of communicating, and, as many family therapists will tell you, it is not always the best way. Defy convention and make open, regular communication an essential part of your family business. When you sense communication problems, confront them immediately. Larger issues at play? Bring in an outside consultant.

2. Set boundaries. Leaders of flourishing family-owned businesses know that setting boundaries is critical to establishing and maintaining success. Institute and uphold a clear separation between family and business. In other words, keep family issues out of the boardroom, and keep work at the office.

3. Practice good governance.Setting boundaries also extends to the governance of family-run companies. Good governance requires the involvement of leaders outside the family. This oversight—employed by leading family businesses worldwide—typically takes the shape of a professional, advisory, or supervisory board comprised of non-family members with a limited number of family representatives.

Step-by-step explanation: