Because business is a family affair
Did you know there are currently 2.259 million small businesses operating in Australia, accounting for 98 per cent of all business in Australia?
Ask those business owners and many will tell you it’s a family affair – either directly supporting, employing or affecting the lifestyle of family members beyond just the main business owner.
That makes small and even medium, business a family affair, and with that comes both pros and cons.
Here’s an insight into handling the balance of family and business, and why your numbers and how you discuss them might just hold the key to navigating that tricky line.
Far beyond just the business owner
Most small businesses start with either one person or a couple driving the business idea, and this extends across all spectrums.
Whether it’s a family farm, a retail outlet, a home-based trade business, or a real estate office, one or both members of the couple are likely to remain involved in the business for as long as they own it.
As the business grows, there’s often involvement from both, with one person performing the day-to-day tasks while the other looks after areas like accounting, marketing etc.
But even if a business is just one person’s domain, the reality of small business is it seeps into all areas of family life.
Not only does business help fund a lifestyle, it takes up mental space, time outside hours, and unlike a 9am to 5pm role, isn’t something the business owner tends to switch off from, or walk away from with ease.
In some businesses, there will also be multiple generations involved, or siblings. And the bottom line is when you mix business with family you have to be very clear on what you’re hoping to achieve, where the business is at, and how you plan to get there.
Which brings us to numbers.
The importance of clear numbers
Regardless of what type of business you have and what type of partners are involved, numbers tell the accurate story of your business.
They illustrate where the business is currently, where it has been and, using KPI’s, goals and planning, where it hopes to go.
Used effectively, numbers can give business owners real clarity about their current situation and the business potential. But to use them you have to talk about them, which is where family and business can sometimes be a challenging mix.
Finances is not a dirty word
Business Insider recently noted that when it comes to the things most couples fight about, finances are right up there at the top of the list.
It’s no different in any business partnership, the numbers can be hard to talk about and can elicit discomfort when discussed.
Importantly in many small businesses, one family member has been entrusted with looking after these financials and sometimes this can feel like an overwhelming burden to bear.
So, what are our top tips?
Love thy numbers
Although one person in a family might be entrusted with the accounting, financials should be an area that every business owner understands and is kept abreast of.
They should be openly discussed at regular meetings, in the knowledge every partner in the business shares some responsibility for them.
Our top tips for then ensuring this communication is clear and useful include:
- Know your numbers – keep them current and keep your business books clean
- Ensure the person responsible for accounting is confident, comfortable and is given access to training or assistance if required
- Ensure every party has access to the figures and clearly understands what each figure represents and means
- Remember numbers are about the future. If you don’t like what you see now, they give you the tools to improve
- Once you know your numbers set KPIs together that are feasible and attainable to give our family the lifestyle it deserves
The final audit
Numbers are the language of business and they should be used without emotion. They don’t lie, they reflect the reality, and are a tool to propel your business to success.
That’s why it’s critical in a family business that numbers are not only known, but understood and discussed.
Want help to make Better Business Decisions
With over 30 years experience spent deep in the trenches of tax accounting and small business, Liz Jarvis is far from your average chartered accountant.
As the founder of Better Business Decisions, she is a passionate advocate for small and medium business, who educates and empowers operators to understand the story their business numbers tell.