Financial Management Of Family Businesses

According to incomplete statistics, about 70% of the world's enterprises are family businesses, of which nearly 40% of the world's top 500 are typical family businesses. The family businesses in the United States employ 60% of the United States and create half of the total GDP value of the whole country.

With the pmission of the idea of "mass entrepreneurship and innovation", and the introduction of a series of preferential tax policies for small and micro enterprises, small and medium-sized family businesses have become the most common form of organization in the social economy. At present, more than 90% of the private enterprises in China are family businesses, and family businesses have become the main force of China's economic development.

The survey shows that the average life span of family businesses in the world is less than 30 years. Only 30% of family businesses can survive to second generations. Only 10% of them can "live" for third generations.

There are many reasons for this. Only from an accounting point of view can we talk about financial management of family businesses.

Chaos in financial management of family businesses

One of the chaos: boss CEO, boss CFO

It is undeniable that many

They are all husband and wife shop type private enterprises. At the beginning of their business or development, their husbands are running the market to catch sales, and the wives manage the purchasing bookkeeping books everywhere. Of course, under the circumstances of the small size of enterprises, it is impossible for them to operate.

However, due to the inertia of thinking, when the enterprise grows and develops, some family businesses continue to start the management and control mode at the beginning of their business, which leads to the fact that the boss is CEO. The boss is a phenomenon of CFO. Even if a professional manager is introduced, the chief financial officer is recruited from the outside. On the surface, it is called "professional normalization" management, but its substantive control is still firmly in the hands of the boss and the boss.

Chaos two: two sets of accounts inside and outside, accounting for two skin.

It can be said that the vast majority of family businesses have two sets of accounting practices inside and outside. The purpose is very clear: one is to evade taxes by concealing income and a series of cost expenditures; two, do not want to be too publicity to avoid wealth exposure.

When Dapeng was chatting with a family business owner who had lost a lot of profits in the long run, he said, "we are not easy to earn money, we can not afford all kinds of taxes, we can't afford to catch up with trees, or we should keep a low profile." we have laid out two sets of accounts.

Most of the accountants recruited outside the family business are doing some basic accounting and accounting treatment, and their important information is in the hands of their own people. Therefore, the management mode of "two sheets of leather" has been formed.

Chaos three: spend money on my calculation, the system aside.

Because of the private characteristics of the family business, it is destined that every penny spent by the enterprise is the owner's own property, so there is a phenomenon that the enterprise system is nominal.

Although most family businesses have perfected the corporate governance structure and set up a lot of financial management systems, in practice, there is still a case of ignoring the system and spending money by the boss. Sometimes, there are no bills and other vouchers, which are not included in the cost, nor have they been approved in accordance with the corresponding process. But the boss threw a "quick payment" as an accountant. Do you pay or not? So, looking at the accounts of the family businesses that are not standardized, nine times out of ten, their original vouchers are missing and the process of approval is incomplete.

It should be said that most bosses of family businesses attach great importance to cash flow. Although they do not understand the principles of accounting, they also know the importance of cash flow to the development of enterprises. Therefore, the receipts and payments have become the focus of their control. However, sometimes the considerable cash flow does not necessarily reflect the real situation of the enterprises. After finding out a family business which is mainly cash pactions, it finds that its cash flow is very impressive. But after careful understanding of the business, it is found that the profit of the company is not optimistic, because many costs are not paid, and the boss is not considerate when he makes a "small calculation".

Managing financial management chaos

In fact, the chaos of financial management in family businesses is far more than the above. ROC here only lists a small part of it. What should we do in view of these management chaos? ROC personally thinks that we should start with the following aspects.

One of the books: the desalination of the family system and the introduction of managers

FOTILE group, which is engaged in the production and sale of kitchen appliances such as cooking fume exhauster and so on, is a typical family business. But after its development to a certain stage, Mao Lixiang, founder of the FOTILE group, began to dilute the family system (its younger brother went to work in FOTILE group was also rejected by him), and introduced a lot of professional managers (his wife was in charge of the company's financial power, and later placed in the introduction of the chief financial officer).

Dapeng believes that if family businesses want to be bigger and stronger, it is necessary to get rid of many disadvantages of "people management", especially in key jobs such as sales, procurement and finance.

Treasure two: standardizing accounting books, inside and outside a sample

If family business wants to further develop or enter the capital market, its accounting norm will be the direct reason for its success, because an important way to accept public supervision is the disclosure of accounting information.

Therefore, Dapeng does not suggest that enterprises do two sets of accounts inside and outside (if necessary, establish appropriate auxiliary ledgers), but combine the actual situation of enterprises to realize the limited internal sharing of information, and gradually standardize accounting treatment, so that enterprises can keep the accounting information displayed internally and externally, and achieve "one account and two purposes", which not only meets internal management needs, but also discloses reports to the outside world.

Treasure three: use the system to manage people, and follow the procedures.

Whether family businesses or non family businesses, the healthy development of enterprises is based on the system, especially family businesses. It is more important to avoid using family identity to manage enterprises, but to establish and improve relevant financial management system, refine and perfect related expenses and approval process, and avoid "one word" or "one pen" in the aspects of capital collection and payment and cost expenditure, and implement appropriate hierarchical authorization, so as to realize power supervision, responsibility sharing and benefit sharing.

Because the family business is the management of its own person, it is particularly important to manage the system and manage the work according to the process.

Because of the difficulty of financing for enterprises, especially small and medium-sized family businesses, this is the reason why many family businesses have cash first management. This is understandable. However, some family businesses emphasize and value cash flow, ignoring or ignoring the important role of profits in enterprises, which leads to a thriving cash flow on the surface and a miserable profit in reality.

Profit is the value reward of the enterprise to shareholders, and the enterprises without cash flow can not survive. Similarly, enterprises that are not profitable can hardly develop in the long run.

Family businesses want to be bigger and stronger and even longer, and both profits and cash flows must be concurrently managed.

In the current economic environment with strong entrepreneurial atmosphere, more and more family businesses (or similar family business partnerships) have sprung up like mushrooms. If family businesses are born at the beginning of opportunities or contingency, growth, development and strength require good corporate management, especially good financial control.

No matter whether you are the founder of family business or the successor of family business, you need to attach importance to the chaos of enterprise financial management and take corresponding measures to manage and improve it.

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