She’s the boss

Hannah Gordon tells us what is has been like becoming the boss in 2018 as she starts her own garage business

Published:  05 July, 2018

After learning the ropes and being on the tools for 14 years I decided 2018 was the year to bite the bullet and go it alone with starting a new workshop business.

For years I have been working for two or three different garages, enjoying a huge amount of variety and picking and choosing what days I work where. I have been extremely lucky with the people I have met along this incredible journey. Also, working for some real characters of the trade certainly doesn’t lead to a boring work life.

I have always worked for independent garages, the interaction you get with customers and the personal experience you are able to offer is for me what car repairs is all about. I love hearing how much people value their car, not financially but in a kind of ‘member of the family’ way and it fills me with a great sense of achievement when I can get their car back on the road in good working order.

Bright idea
It is not the obvious choice for a ‘young lady’ and I use that term in the lightest possible sense as I can hardly call myself a lady when things go wrong and the air turns blue, but that is another story for another issue. It isn’t a normal career choice but fixing cars is all I have ever enjoyed doing, it is the only thing I haven’t lost interest in and it is the only trade I ever want to be a part of.

So January 2018 came and I had the bright idea of starting up my own business in the village I grew up in. It has been nearly six months now and progress has been slow, trying to keep costs down I am distributing leaflets myself and offering incentives such as 10% off.

Best asset
A workshop business’s best asset is its reputation, and that takes time to build up. I am also finding out that being self-employed requires a million more hours than just turning up to a garage and working.
    
It is not that I am naive it’s just I am rubbish at paperwork, invoicing and doing all the other grown up things that a business needs. To say it is a massive learning curve is an understatement. Before January I didn’t have to bother with business plans and meetings with a bank manager, I didn’t have to spend hours at a computer trying to write down why I am worth investing in and what my plans for taking over the car repair world were.

Passionate
The car repair industry is something I feel hugely passionate about and I firmly believe that when starting a business you make sure it is an area you are knowledgeable in otherwise you will never strive to make it work. At the moment I feel slightly overwhelmed by paperwork and getting on the tools is always first priority but I am hugely excited about the future and what Spanner Tech Services has in the pipeline.

Related Articles

  • Unfinished monkey business 

    It’s been a while since I’ve trawled the online job pages,  but the other day I was sent a link to a job that had been advertised. A local main dealer who shall remain unnamed was in need of a NVQ Level 3 Technician, nothing too strange about that, but as I read on the salary surprised me. The role was being offered was just £16,000-£18,000 per annum. Underneath this advertised job was a vacancy for a Warehouse Operative with a starting salary of £18,500 and no experience needed.  
        
    This is a huge problem with the automotive industry and its inability to keep skilled and experienced mechanics especially in main dealers. The Level 3 qualification requires a significant amount of work and exams that can take years to achieve, knowledge needed to work on modern cars is becoming vast and learning is continuous to stay up to date with technology.

    Shortage
    Every year I hear the problem about a shortage of mechanics. Every year the industry struggles to fill gaps in its workforce due to the lack of skilled techs. And yet, as I constructed a Twitter post about the job I had seen I found how many disgruntled ex-technicians actually exist. The tweet proved to be a sore point with certain people who explained that they left main dealers to go to independents due to better pay, some even moved completely away from the automotive sector to again be paid more and be treated better.
        
    As an industry we need to retain staff and pay them according to the skills and knowledge required to work on ever more complicated vehicles. A common problem I found was the time restrictions within which techs are expected to complete repairs. From every mechanic I have met they strive to fix issues, they want to solve customers problems and provide a roadworthy vehicle in return.
        
    Primarily I entered the car repair trade because I am addicted to fixing problems and providing a great service to consumers, hourly rates are soaring and I feel customers simply aren’t getting value for money at some establishments.

    Imperative
    As a business owner it’s imperative that the mechanics are all highly skilled and customer friendly, the garage business is all about reputation and that starts with the quality of work. There are no time restrictions, for me the most important factor is returning a vehicle that is fully fixed and safe. I believe that providing a wage that reflects the mechanics skills and the continuous on the job learning they have to complete is vital, as well as this providing them with the tools required for the job.

    I find the salary of £16,000 an insult, to pay that kind of money for a skilled individual is terrible. I hope mechanics in the area know their worth and won’t apply for it, but I also hope that soon the automotive industry can start attracting and retaining more individuals. I will leave you with the saying ‘if you pay peanuts you get monkeys.’  



  • When the levy breaks 

    As the song goes, “When the levy breaks, I’ll have no place to stand.” Well, it doesn’t go exactly like that if you are a spelling pedant, but has the Apprenticeship Levy worked for you? Has it helped your business find suitable young people during its existence. Equally, when it was announced that it was going to be reformed, did you feel the floodwaters rising?
        
    Maybe the government did feel their feet getting wet recently. At the Conservative Party conference at the end of September, Chancellor of the Exchequer Philip Hammond announced a number of measures to reform the Apprenticeship Levy, and a review into the scheme, which was launched in April 2017. This followed criticism from business regarding the difficulty of dealing with the system and falling numbers of young people seeking the career option.

    Strategy
    The Apprenticeship Levy was launched with great fanfare as part of the government’s industrial strategy, but it has been slogging through the mire since then. According to the Daily Telegraph, in the first three months after the introduction of the Apprenticeship Levy, there was a 60% drop in the number of people starting apprenticeships. This fall was subsequently partly made up, but the scheme has still not been providing the service  it was intended to give.
        
    The Open University published a report into the Levy in April 2018. It found that of the £1.39bn paid into the system by English businesses, only £108m has been taken. This would seem to suggest that businesses  have been having trouble working with  the system.
        
    On the other hand, the study also found that 84%of business leaders in England that were asked the Apprenticeship Levy in principle and, despite some negative preconceptions at the start, 54% felt more positive about the scheme in 2018 compared compared with 2017. That said, the study also found that 40% of business leaders still saw the Levy as little more than a tax, and 17% did not believe it would recoup its costs.
        
    Considering the reach of the Apprenticeship Levy, that could be a problem. It is paid to HM Revenue & Customs by all UK employers with an annual wage bill of over £3million via the PAYE process. This enables organisations in England to take funding from the National Apprenticeship Service to spend on apprenticeship training. According to the Open University, there are still a number of barriers to get over for the scheme, including managing apprenticeship programmes, associated costs and apprenticeship content.
        
    Not all businesses have to pay into the Levy, but according to the study, those that do have to pay in are more supportive of the scheme than those that do not. 92% of those in charge at businesses where they do pay in agree with the Levy in principle, but 43% of these want changes. Support for the scheme in businesses not covered is lower, with just  72% in favour, and 34% saying it would offer no benefits.
        
    While this is not exactly a hostile environment, it’s not entirely welcoming either. Did someone say ‘quagmire?’

    Flexibility
    It is in this context that Philip Hammond announced changes that will aim to open up access, and make the scheme work for businesses and employers. This would include more flexibility and expand apprenticeship courses in science and other STEM subjects. Specifically, the proposals would  allow large employers to transfer up to 25% of their Apprenticeship Levy funds to businesses in their supply chain from April 2019.
        
    In his speech at the conference, Philip Hammond said: “We have heard the concerns about how the Apprenticeship Levy is working, so today we’ve set out a series of measures to allow firms more flexibility in how the Levy is spent. But we know that we may need to do more to ensure that the levy supports the development of the skilled workforce our economy needs. So, in addition to these new flexibilities, we will engage with business on our plans for the long term operation of the Levy.”

    Widening
    It seems like a positive step. But what are the possible implications for the automotive sector?
        
    Responding to the speech, Steve Nash, Chief Executive at the IMI, said: "Philip Hammond has set out the Conservative party’s wish to be considered the ‘party for business’. And the widening of access to the Apprenticeship Levy, to those businesses in the corporate supply chain, is excellent news.  For some time, at the IMI, we have been hearing from businesses that they believed the scope of the Levy was too limited."
        
    “But we urge caution when it comes to reviewing the apprenticeship model in 2020, which was also proposed by Philip Hammond. Of course, it’s important to listen to business and address any barriers to apprenticeship take-up. But by 2020 the new reforms will be fully bedded in – wholesale change would therefore be a disaster. The last thing businesses need is to have to start all over again.
        
    “Already recruiting 12,500 apprentices each year, the motor industry is wholeheartedly committed to futureproofing apprenticeships and has already engaged as positively as it can with the reforms introduced last year. Indeed, we believe that the motor industry is one of the most engaged sectors when it comes to adopting and promoting the new apprenticeship model.
        
    “The IMI therefore urges government to stick with the new model already introduced and to focus its efforts on ensuring businesses fully understand how they can maximise the levy for the benefit of their organisation.” Steve added: “The skills gap in the motor retail sector is already critical. Young blood is, therefore, vital as the rapid development of new technology around electric, autonomous and connected vehicles changes the face of motoring, opening up a world of exciting new career opportunities.”

    Summing up
    Considering the sheer scale of the automotive aftermarket and the large number of smaller businesses within it, it’s fair to say for a great many of our readers, the Apprenticeship Levy is something that happens to someone else. Widening access to funding for apprenticeships though is vital, so the government has the right idea. It would be great if more garages were accessing the funding. Getting access to the right kind of young talent is a topic we often come back to. We look at it from the school leaver perspective, the employer perspective, the educational establishment perspective, and here we are looking at it from a legislative and political perspective.
        
    We end up coming back to the fact that there are just not enough people coming our way, so then we end up asking ourselves again, “are we paying enough? Do the teachers understand what we do?” There is the argument that apprenticeships have not been run right for decades, but of course on an individual basis there are thousands of garages out there providing a solid grounding in the sector for bright and eager young people. It’s a complex picture, but more support would definitely help.



  • Managing a winning team 

    Most businesses need staff to operate effectively and this means that those staff need to be managed. However, what does ‘managed’ really mean and how can the ‘business manager’ also be an effective manager of people?

    A good manager of staff should fully understand the roles and responsibilities of all of their team members, but ultimately, each of those team members should be better at doing their own jobs than the manager could. Secondly, the manager should be able to ‘get the best from the team they have and only change it when all other possibilities have failed’. In summary, the manager needs to know how to structure, manage and motivate his team to optimise their performance.

    Critical
    It is a well-known saying that people don’t quit their jobs, but they quit their bosses, but in reality this means that they left their job because it wasn’t enjoyable, or that their strengths weren’t being used or that they weren’t growing in their careers – and who is responsible for this – their manager.
        
    Recent research showed that 31% would swap their manager if they could and 22% felt that they could do a better job themselves if they were given the chance. Ineffective management not only impacts negatively on staff retention, quality of work and morale, but also on customer service and your company’s image. Not good for either your staff or your bottom line.
        
    The best managers know what they are doing, where their businesses are going and ensure that they have the right people in the critical roles to make it all happen. They then communicate and delegate effectively to their staff who have been trained, supported and motivated to fulfil their responsibilities. Businesses with well managed and competent employees are the best performers and frequently handle problems before they escalate to become real issues.

    Guiding principals
    So what are some of the key guiding principles for good people management?

    1. Build solid and respectful relationships
    Don’t aim to be liked, but aim to earn and keep the respect of your team
    Take time to talk to members of your staff. It will show that you are interested, but it will also be both motivational and allow you to better understand their position and any concerns that they may have. Be confident, strong and professional, whilst remaining transparent, approachable and encouraging.

    2. Strengthen your communication skills
    Your ability to listen and communicate is vital to your success as a manger of people. I don’t just mean your ability to listen and speak on a one-to-one basis, but also your ability to capture people’s minds in order to present your ideas, values and visions as well as your ability to listen and soak up the ideas, values and visions of others; that is true communication. Whether you are speaking with one person, or presenting to a whole audience of people, strong communicative skills are a must.

    3. Actively develop your team and be the team leader
    As you build and strengthen relationships throughout your team, you should begin to identify the individual talents, abilities and strengths of your employees. Knowing this detail will help you develop your team so that everyone is positioned within a role in which they can succeed and excel. Take time to communicate with each employee individually, as quite often employees will be forthcoming about what they see as their strengths and where they aim to be; they may also spark ideas to strengthen your team and its performance as a whole. Sometimes low morale and performance can be due to a lack of support and training. Ensure that your whole team are up to date with regular training appropriate to their role.
        
    To establish what your employees really appreciate and value, or to discover their training and support needs, use surveys, one-to-one appraisals or focus groups to talk through each key area to identify the good points, skills gaps or areas that should be improved. Quite simply, support your team.

    4. Be transparent
    Hiding things from your employees is a recipe for disaster. Remember that you have spent time building relationships with these people, relationships based on respect. As part of that mutual respect you also need to engender trust. By remaining transparent, honest and trustworthy with your employees you will further develop their respect and loyalty.

    5. Take responsibility
    This can often be tough, but is a sign of truly exceptional people management. As the manager, leader or head of your company, all responsibility should end with you. You are accountable for the performance of your employees. Remember failure is not a weakness; it’s an opportunity to learn, strengthen and improve. Take responsibility for your team and they will further respect you for it.
        
    All of these people management principles are important internal management skills, but these will also be seen externally by customers in a variety of both obvious, and not so obvious, ways.

    Perception
    When customers experience your business, whether by telephone, e-mail or physically visiting, their perception will be significantly more positive if they feel that they are being looked after by a well run, well managed business with highly motivated and professional staff. Often it is almost imperceptible how this can be picked up, but for sure, if your staff are not working within a well led and motivated environment, it will be reflected in their attitude to their work and frequently, to your customers in a negative way.
        
    The reality is good managers are not born, but learn the skills as part of learning how to understand people as individuals. Most of us work much better if we enjoy what we are doing. It has been said that the best qualification for running a business is not an MBA or a qualification in accountancy, but in psychology. Ultimately, good managers plan, monitor and review before delegating the work, but they can only do this effectively if their team is working well.
        
    As a small business, it may be a difficult to become recognised as one of the Sunday Times ‘Best companies to work for’, but the same good management practices will still apply.  Work hard with your staff and they will work hard for you.
    xenconsultancy.com

  • Head for the Brexit 

    We've been talking about Brexit for a while now. At least once in every issue there will be a story about the process of leaving the European Union, and the potential impact on the automotive sector.  
        
    While progress is hard to gauge, with every issue there is some new angle. It's difficult to keep up, so that handy phrase "as we went to press" gets used a lot. Using it yet again, as we went to press for the October issue, a deal with the EU seemed more likely. Reports were surfacing of Germany and the UK dropping certain demands that would enable an agreement. A positive development then.
        
    Have we been giving a balanced view through the process though, and are we asking the right people what they think? Maybe, and maybe not.

    Positive aspects
    David Dawson, co-owner at Preston's Car Doctor contacted Aftermarket to express frustration regarding the coverage of Brexit in the magazine. He had this to say:  
        
    "You’re becoming as biased as the BBC. this is Project Fear all over again. Try balancing your reporting with some positive aspects and opportunities that Brexit may provide us with. BAE Systems has won a £20bn contract to build frigates that will form the backbone of the Australian navy, beating off rival proposals from Italian and Spanish groups for the biggest naval defense deal of the past decade.
        
    "I know it’s not automotive news but there will be many opportunities like this for the automotive industry outside of the EU post Brexit. The Germans French and Italians will still want to sell cars to the UK. It just annoys me that the media constantly go on about how bad it will be when we leave the single market. There will be many opportunities and upsides out of the EU even on WTO tariffs."
        
    David added: "I read Aftermarket magazine, both online and the printed version and have done for many years. However in recent times many of your articles paint a dim picture for the industry outside the EU would be nice to read something positive for
    a change."
        
    Now, as a publication we stand by our reporting, and will cover positive and negative views on key issues as they arise. We do listen to our readers though, and David's argument did make us think. It also raised another issue – one of representation.
        
    Having heard from David in the north of England, we thought we might take views from other businesses around the UK, to see what they think the impact of Brexit will be on their business.

    Access
    Turning our attentions south, we asked Kevin Pearce from 2018 Top Garage winners Cedar Garage in Worthing his views on whether Brexit will have a positive or negative impact on the aftermarket. "I think it could go either way," mused Kevin. "I don't see any positives it can necessarily bring. On the negative side, I think we could struggle to get hold of technical data and manufacturer-specific information." According to Kevin, UK consumer buying choices have built up a car parc that could swing things 'our' way: "Considering the number of vehicles we actually import, especially the German stuff, we should actually be in a very strong position to dictate terms. If they want to continue to sell cars to us, whoever is negotiating for the UK should be able to dictate terms on that. Going forward, in terms of telematics we need to make sure the aftermarket stays on the right side of the manufacturers to make sure we continue to get access."
        
    Cedar Garage recently opened a German marques-only outlet, so we wondered if he thought Brexit might have a specific impact on the business's ongoing endeavours: "If it does, not for a long time," replied Kevin. "I think generally it will all come down to how well the negotiations go. We have good access to all the data we need for the German brands. So long as Brexit does not get in the way of that, I can't see how it could cause a problem.
        
    "Obviously a lot of the parts that we buy come from Europe. Hopefully the prices won't increase too much. At the end of the day, we import so much, that if these people then do not want to sell to us, they are surely going to be the ones that lose out."
        
    We went onto ask if Cedar Garage's customers had displayed any noticeable Brexit jitters: "So far it does not look like that at all. We have not seen anything like that. All of our customers are carrying on as normal. If any of them say, ‘I can't afford this or that’ I don't think it affects our trade that much. Maybe if it was car sales, but definitely not in terms of the repair market."
        
    While garages on the south coast might be closer to the continent than most of the other businesses in the market, it's not like Cedar Garage customers are likely to head over the channel to France for their car servicing is it? Shaking his head, Kevin replied: "Of course not." As far as Kevin was concerned, the market is changing and this should mean the supposed consumer confidence hit that might result from Brexit could be over-stated: "What we are finding is that people are looking more and more for a professional service, and are prepared to pay for that. People are becoming more conscious of what goes into a car and are prepared to pay. They would rather pay a professional to pay to repair their car, rather than someone they met down the pub who does it in the car park."

    Uncertainty
    How you feel about the relative opportunities and threats of Brexit can largely depend on where you are sitting. For businesses in Northern Ireland however, Brexit has its own special issues. Starting with the more general concerns,  Colm Higgins from CH Autoservices  in Magherafelt, Northern Ireland said: "I think the biggest issue for most garages, with the position we are in, particularly the go-ahead guys who are into diagnostics, is access to data. This is the issue we would want to address first and foremost. We rely on the access to manufacturer data that is assured through European regulations like Euro 5, so obviously we are concerned. With Brexit nobody really knows what is going to happen.
        
    "Some of the manufacturers, like Mercedes-Benz, had a very good scheme where you could lease a diagnostic tool, but they removed that recently, and I think it is tied to Brexit.
        
    "Obviously the price of parts and access to parts, is something to be concerned about as well. MOTs too, as well as emissions. Are we going to establish our own standards? Are we going to be governed by European rules? Or are they going to be similar to the European rules? Is it a chance for the UK to make its own emissions standards. If so will they be similar, or less?  
        
    Colm continued: "Also, what affect will it have on the car parc? What cars will we be working on? Are we going to see a change in consumer activity as well? What the good guys seem to do is look at what people are buying and how the market is going and see the trends. Obviously electric vehicles is something we have invested in here. Is that going to be impacted by that? Is it going to be more or less. It is important to get an idea of where things are going to go. The biggest problem is that nobody knows.
        
    "Almost everybody has a German or French car in the UK, or at least a European car. What is going to  happen? Are they going to be taxed more? In the second hand car market we are still seeing the effects of years of uncertainty over diesel."
        
    "The key thing for any business is to be ahead of the curve or at least be aware of where it is going before it gets there. For any business you would be absolutely crazy to  bury your head in the sand. It gives you a very good reason to read the latest industry news so you know what is going on."
        
    One problem that most businesses in the UK don't have to worry about is a land border with the EU. For businesses in Northern Ireland  that is a real concern. Will Northern Ireland motorists head for the Republic for servicing and repairs if prices rise as a result of Brexit?
        
    "There is already a lot of that happening in Northern Ireland" said Colm. "We are about an hour's drive from the border. Some of my customers in trade sales, they sell a lot of cars to the south because the Pound is weak. We can make the most of that depending on the situation, as we can buy stuff from down there and sell it up here, or vice versa. I am optimistic, and we can make the most of that kind of situation. Because we are so close to the border,
    we can be flexible. Northern Ireland is unique that way, and more flexible if we have to adapt. If Brexit becomes
    a complete nightmare there are options in terms of suppliers."
        
    Then there's the threat of a hard border: "That's a big issue," opined Colm, "and a complete minefield. We have enjoyed this border-free situation for a long time now, and no one wants to go back to having a hard border. The flexibility would be gone. No one wants to go back to the old days here."
        
    Despite these concerns, Colm remained confident: "Anyone who is in the higher end of this business is ready to adapt to change. In the next few years you won't see an engine or a piston as it is all going to electric motors. It is change or get out really. Brexit is another factor in the motor trade, albeit one that is going to affect your life in a big way."

    Double meaning
    Next, we looked to Scotland, where the issue of exiting a bloc has a double meaning. Pier Garage is based in Ardrishaig, Mid Argyll. Owner Kris Gordon's first concern, like his counterparts in other parts of the UK, is access to data: "My biggest concern is definitely access to information. You can't get all the information from all car manufacturers. Even with the situation we have at the moment, we still struggle. With someone like Ford, they make it quite difficult to get it, and they do charge you for everything, so whether it works worse or better is my
    main concern.
        
    "I voted to leave at the time, for other reasons. There was so much stuff being put out there that you didn't know who to believe. You just had to pick a side and go with it I think. Nobody knew what chaos would happen as a result of it all. I suppose if you had thought about it, it was obvious what was going to happen. Now we are in a situation where nothing has been answered. It is worrying, because it has been a hard enough few years since the banking crisis in 2008, and now it looks like it is all going to get worse. We will have to ride it out and see what happens."
        
    Kris believes Brexit could be leading Scotland into a period of greater uncertainty than the rest of the UK: "I think it will cause a lot of distraction rather than getting people focused on getting the economy in a better place. Political parties will be thinking 'do we have to have another independence referendum and then rejoin the EU?'  Again, I voted for an independent Scotland, but now it has been decided, everyone has made their choice and is getting on with it. Despite this, the SNP is still focused on a second referendum, rather than just accepting the result and getting on with things. If we have another referendum and it goes the other way, where will it end? It could go back and forth, and the same with Brexit, there is always going to be someone who is unhappy. I think they need to accept it and do the best they can."

    Your views
    We found a mixture of views from business owners on both sides of the argument. Do these views on Brexit chime with your own? Or do you have an opinion not expressed here? We would love to hear from you. Get in touch with us via alex@aftermarket.co.uk to tell us what you think.

  • part TWO: Succeeding with succession 

    Businesses change hands for all manner of reasons, but crucially for family businesses, change has the potential to damage family harmony as well as destroy the future wealth of all concerned. But what happens should no family members want to take on the business and the business has to be sold?
        
    In this instance David Emanuel, Partner at law firm VWV and head of its Family Business team, says the family should take advice on the options. He advises seeking recommendations and says to “think hard about engaging people who work principally on a success fee percentage commission-only basis – the overall cost may be higher, although you may be insulating yourself from costs if a deal doesn’t go ahead – but there can be a conflict of interest for people remunerated only if a deal goes ahead.”
        
    One step that will ease the process is to undertake some financial and legal due diligence as if the seller were a buyer, to identify any gaps or issues that may affect price or saleability.

    Seeking a valuation
    Businesses will generally be valued on one of three bases – the value of net assets plus a valuation of goodwill; a multiple of earnings; or discounted future cash flow.
        
    Nick Smith, a family business consultant with the Family Business Consultancy, sees some families seeking the next generation pay the full market value for their interest, and other situations where shares are just handed over.
        
    “In between the extremes,” says Nick, “there are a raft of approaches and solutions including discounted prices and stage payments. There are also more complicated solutions such as freezer share mechanisms, where no sale takes place but the senior generation lock in the current value of their shares to be left to the wider family and the next generation family members actually working in the business receive the benefit of any growth in value during their time in charge.”
        
    What of an arm's length sale? Here David says: “The family will ideally want to be paid in cash, in full, at completion, rather than risk the possibility of deferred consideration not getting paid because the business gets into difficulties under its new owners, or a dispute arises over what should be paid.” However, he says that may not be possible, and there may be many good reasons why the retiring shareholders keep an equity stake or agree to be paid over time or agree that some of what they get paid is subject to future performance. Even so, he suggests starting with the idea of the ‘clean break’ and working back from there if you have to.
        
    It’s important to remember that in a succession situation, where one generation is passing the business to the next, and the retirees are expecting a payment of value to cover their retirement ambitions, deferred payment risks may be looked at differently depending on the circumstances – families will be more trusting.
     
    Tax planning and family succession
    As might be expected, tax planning is important and should always form part of the decision-making process but it should never be the main driver. That said, no-one wants to hand over, by way of inheritance tax, 40% of the value of what they have worked for.
        
    Both Nick and David consider tax planning key. Says Smith, “the most important point is what is right for the family members and the business itself.” He believes the UK offers a fairly benign tax-planning environment for family business succession so that most family businesses can be passed on free of inheritance and capital gains tax to other family members. However, the risk of paying a bit of tax pales into insignificance if passing on the family business to the next generation means passing on a working lifetime of misery and a failing business. David points out that if Entrepreneur’s Relief is available, the effective rate of Capital Gains Tax is just 10%.

    In summary
    Family businesses are peculiar entities, caught by both the need to compete in the marketplace and the need to keep familial factions onside. Whatever course is taken to secure the future of the business, one thing is certain – everyone needs to keep the lines of communication open.


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