Keeping it in the family – the rise and resurgence of the family business
It was interesting to read in the Economist last month that companies controlled by their founding families remain important, and they look to stay so too. While the statistics that inspired that particular article come from the US, the same is very true in the UK. Family owned businesses are strong – globally.
In fact, according to figures from Barclays research, family owned small businesses are some of the fastest growing in the country. There are currently more than two million family run businesses in the UK and they contribute around £180 billion to the economy every year. By 2018 this figure is projected to rise to around £218 billion a year. No small fry when you consider that these figures are greater than those delivered by the UK’s entire manufacturing industry. And the retail industry is dwarfed in comparison too.
Most recently, statistics from the 2014 PwC Family Business Survey of nearly 2,400 family business decision makers in over 40 countries, found that family businesses remain resilient and dynamic even though the post recession economic environment is proving tough. In the UK, eight per cent of these businesses are aiming to grow aggressively over the next five years with eighty two per cent expecting to grow steadily in the next five years, while seventy three per cent reported on growth in the last twelve months.
This resurgence of the family business could well be a result of the slow but steady recovery we’re now seeing post recession. As family members have found themselves redundant or unable to gain employment, and as the economy has started to gain momentum, business plans have come together to ensure work for relatives as well. Providing money for the family and keeping it in the family.
This certainly seems to be the case talking with Nigel, who runs a small building company with his father, Don. “When my son left school last year he thought he’d go into the corporate world, but with no experience, he found getting a foot in the door tough. Work was picking up for us and we needed an extra pair of hands. Now Stephen is working with us and learning from my dad in the same way as I did. He’s the future of our company – he’s already having some great ideas for making us more efficient in what we do, and I’m really pleased that we could give him the opportunity.”
Karen and David had a similar experience when their son was made redundant last year. “I was at a crossroad in my own career path. I’d stopped work while the children were growing up and our youngest is now at high school so I needed a new project. My experience in the business world is very out of date now though, so I knew I’d find it difficult to enter the business world at a similar level to when I left. So we set up our online retail business to keep us both out of mischief.
“Working and living together can be difficult at times, but we’ve learned to separate our two lives – business and personal – so that we can switch off from work occasionally. I’d say though that setting up a business was easier as a result of working together – we can anticipate thoughts and moves, and as a result we’re growing quickly.”
If you’re building your family business, it’s important to make sure roles are defined and well documented, to ensure there are no misunderstandings. Setting up as a limited company also means that the business can be easily passed from generation to generation as the time comes. The PwC 2014 survey suggests that only 13% of family businesses in the UK have a robust and well documented succession plan in place – why not buck the trend and start your business on its road to success with the future mapped out.
Published Saturday January 26, 2013