Businesses Need More Than a Crystal Ball
To survive through generations the business obviously needs to have a robust business strategy and we often find that excellence in customer service is often something that distinguishes a family owned business. By looking after and retaining their existing customers rather than constantly trying to acquire new ones has given many family owned businesses a point of difference and solid foundation to work from.
But this is only one element. All businesses need to ensure they have access to capital. Older family owned businesses are particularly good at maintaining profits and cash in the business. This enables reinvestment into the company and helps maintain balance through turbulent economic times. It helps to have close family relationships with a sense of belonging and also to have no external shareholders demanding dividend returns is an advantage.
In the knowledge that the business will benefit at the end of the mortgage term, very often we see family owned businesses buying their premises rather than renting. The commercial property market is still very touch but if a business has managed to maintain sufficient cash reserves to enable a sizeable deposit to be put down then purchasing premises is still something to consider to reap those longer term benefits. We also often see family businesses owning their premises separately to the business, which gives them the security that the wealth in the property is separate to the main business should they ever wish to diversify into newer riskier ventures.
Many of our business clients have told us that they are trying to counteract the recession by going back to basics, focusing on looking after their customers, getting the job done quickly (at the right price of course) and making sure they get paid promptly for it. Hopefully we will all remember some of these valuable lessons as the economy struggles back. In the meantime maybe its time to think long term and draw up your 10 and 20 year business plans?