Q: My brother and I would like to take over our parents' business; they want to retire. Unfortunately, I have come to realize that they are making payroll, but leaving only a small paycheck for themselves at the end of every week. Our client base is strong, and we have a wonderful reputation in our community. I have no idea where to start making the necessary changes to support us all and be successful. What do I do?
A: Before you and your brother become dependent on the business for your livelihoods, we suggest you work with your parents to make the business more profitable, particularly if they also expect to be deriving revenue from the business after they retire. There are many ways to do this. The first step is to analyze the business's performance.
In many businesses, a large proportion of income comes from a small percentage of customers. If this is what you find, it may be possible to specialize your business to work within a profitable niche. For example, a construction business may make more money by specializing in kitchen or bathroom remodeling than by rehabilitating older homes.
Or, after your analysis, you may find you need to develop a new way of pricing, or that the overhead from employees and a commercial location is eating up profits. You might increase profits by bringing the business home and only taking on work that family members can handle.
It may be difficult to get your parents to listen to you. An accountant with business savvy or a business consultant could help. You can get guidance or a referral from a Small Business Development Centernear you.