Is it too easy to overlook or underestimate the place of family-run businesses in the UK corporate environment?
In May 2019, the Institute for Family Business (IFB) Research Foundation published fresh research that laid bare the true impact of family-owned firms on the UK’s economy.
In 2017, the sector added almost £600m to the country’s coffers – accounting for 28% of the UK’s entire economic output for the year. And, with expectations of further growth to come, is there a case to make for family companies being a core driver of economic performance in years to come?
The ultimate long-term investment?
Going into business as a family can represent the ultimate long-term investment. And some of the most iconic brands in British business originally started out as family affairs. Tesco, JCB, Dyson and Specsavers are just some examples, with many still retaining at least some family involvement.
The long-term success of family-run firms is not exclusive to larger corporations. SMEs account for 99% of UK private business – and most family firms sit in this category. From often humble origins, you don’t need to look far to find stories of success from smaller family companies.
Swift Direct Blinds is just one shining example of this, creating made-to-measure blinds for homes since the company was founded by Alan Swift in 1969. And such success stories are commonplace across the UK – underlining not only the growth of family run companies, but their longevity too.
A question of trust?
A report by Edelman has found that 75% of people trust family-owned companies over non-family competitors, which is perhaps one reason why family businesses are thriving in the long-term.
But what’s behind this higher level of trust? The Edelman report lists factors such as understanding local customs better, creating value for local customers and having more committed employees.
There are other factors that make families well-equipped to succeed in business. First, there will be an involvement on an emotional level that non-family businesses just don’t have. This can lead to a business making more prudent investment decisions or be more cautious about potential threats.
Clear succession structures
It can often seem that family firms have clear structures in place for succession. The most obvious, of course, is when a parent passes the baton over to their son or daughter. It can even include non-family members, if that person has been identified in advance by the current family leadership.
This contrasts with non-family companies and corporations. The succession of leadership can be a much more convoluted process, with lengthy and costly recruitment process. There is also the risk that someone coming into a business in such circumstances isn’t fully in tune with its ideals.
No matter what the reasons are for the success of family businesses in the UK, it’s impossible to understate their importance to the economy. With ambition for further growth, their continued investment in skills in the long-term can only drive the role of family in British business forward.
