Family Businesses

A new report has revealed the key contribution that family businesses make to the UK economy.

Research by Oxford Economics for the Institute for Family Business (IFB), published on 17 December, reveals that:

• the UK has three million family businesses, providing 9.4 million jobs – 39 per cent of UK private sector employment – generating a quarter of GDP and paying £102 billion in tax each year;
• family firms turnover an estimated £1.1 trillion annually, 32 per cent of total private sector turnover.;
• an extra 30,000 family businesses have been created since 2010
• more than one in ten large companies and nearly half of all medium-sized businesses are family-owned; and
• family-run businesses make up over three-fifths of all private sector firms.

Welcoming the new research, IFB director general Mark Hastings said: “Family business is the backbone of our economy. This new research reveals just how vital family businesses are for the UK economy.

“I hope to see policy makers more openly recognising the strategic importance of the family business sector in rebalancing our economy.”

The IFB is urging the government to boost growth in the family business sector by introducing more alternatives to bank lending for business finance. It is also wants the Enterprise Investment Scheme rules to allow family businesses to invest in new family start-ups, which is currently prohibited, which it says would foster entrepreneurship and boost innovation in the sector.

At Palmers, we are experienced in working with family businesses and can provide tailored advice to help them plan for growth, to strengthen internal governance and for smooth transitions of ownership between generations.

Our expertise includes succession planning, shareholder and partnership agreements and family dispute resolution. For more information, please visit our website or contact BJ Chong.

Almost two-thirds of family business owners say they would be prepared to sell their businesses because of difficulties in passing their firms on to children, according to new research.

A study of around 350 UK family businesses also found that only ten per cent had any form of governance structure in place to support and protect the business and the family members running it. Where families did have governance structures, the most usual were shareholder agreements, family charters, trusts and manifestos.

Of all of the businesses that were structured as limited companies, only a quarter had non-family board members and only 20 per cent had non-executive directors to provide independent insight and advice.

The research, carried out by Family Business Place – which promotes and supports British family firms – and Charles Russell Speechlys – found that family members own more than 75 per cent of shares in nearly all (87 per cent) the businesses surveyed.

Yet more than half (55 per cent) saw succession as a barrier to future success, with almost two-thirds (62 per cent) admitting they would be prepared to sell up owing to difficulties handing on the business to children or relatives.

Concerns around planning for the future included intergenerational conflict (24 per cent), succession problems and/or younger family members not wanting to join the business (29 per cent), dividend policies and remuneration of family members (ten per cent) and sibling rivalry (seven per cent).

Just over a quarter (27 per cent) of respondents cited “other” issues – including long hours, recruitment, and disputes around the overall direction or purpose of the family business –  as barriers to future success.

Report co-author Sally Ashford said on 1 December: “It’s no coincidence that family businesses are revealing both a lack of formal governance and concerns or problems with succession – the two often conspire to stunt business growth. It’s essential that family businesses put the right professional, management and governance structures in place to ensure they stay on the right track.

“Family charters, manifestos, or councils can help get family members behind a shared vision or set of objectives, smooth negotiation and avoid arguments, and keep younger family members engaged by allowing them a voice in the future of the business.”

At Palmers, we are experienced in working with family businesses and can provide expert advice to support their development and growth, on issues including succession planning, shareholder and partnership agreements and family dispute resolution. For more information, please visit our website or contact BJ Chong.

Family businesses are looking to step up their export business over the coming year, new research has found.

To coincide with UK Trade & Investment’s (UKTI) Export Week, which ran from 10-14 November, the Institute for Family Business (IFB), a membership body for the sector, released research findings showing that 51 per cent of family firms that already export want to increase the amount of business they do overseas during the next 12 months.

Mark Hastings, IFB director general, said: “It is great to see so many family businesses looking to build on their export successes.

“UK family firms have a real opportunity to grow their businesses internationally – their commitment to quality, their sustainable business practices and their strong family values put them at a real advantage.

“However, it is clear that more needs to be done to support family firms in taking the step to export for the first time. Eighty five per cent (85%) of family business SMEs (small and medium-sized enterprises) still don’t export at all.

Family businesses that are seeking to export for the first time, or to expand existing export operations, may find it helpful to have access to expert legal advice, on issues such as e-commerce, terms and conditions of trading and contracts. For more information on how Palmers can assist, please contact BJ Chong.

People are more than twice as likely to trust family businesses than they are a company listed on the stock market, according to a new YouGov poll for the Institute for Family Business (IFB).

The research, published on 24 July, found that more than half (55 per cent) of those questioned said that being a family firm was important in relation to trustworthiness while just over a quarter (26 per cent) said being listed on the stock market was important.

Strong values were identified as a key factor in the trustworthiness of a business by 88 per cent of respondents and 53 per cent believed family businesses had stronger values than other companies.

The survey also found that 71 per cent recognised that family businesses made an important contribution to the UK economy and 53 per cent that they played an important role in creating employment. A similar percentage (52 per cent) believed they offered higher standards of customer care.

IFB director General Mark Hastings said: “Trust is a critical issue for businesses.  Family businesses not only score well for trust, but have an advantage over other companies.

“Strong values are the key to what makes family firms different. Family businesses pride themselves on carrying strong family values throughout their business practices – maintaining trust is essential when your name is above the door.

“Britain’s family business sector provides more than nine million jobs and produces a quarter of GDP.  They are the backbone of the economy and number many of the UK’s largest and most successful companies.”

Leading family businesses in the UK include Clarks, Dyson, Warburtons, Primark, JCB, Speedo, Glenfiddich, Yorkshire Tea, Aunt Bessie’s, Ginsters, Selfridges, Wates and Walkers Shortbread.

Palmers has extensive experience in working with family businesses and can provide expert advice to help them capitalise on the strengths this structure gives them to support their development and growth.

We can also advise on issues including succession planning, shareholder and partnership agreements and family dispute resolution. For more information, please visit our website or contact BJ Chong.

Famil<!–>y businesses across Europe are feeling increasingly positive about the future, according to new research.

The latest European Family Business Barometer, published on 16 June, found that 71 per cent of respondents were confident about their business performance over the next six months, a 17 per cent increase on the last findings of the last barometer in December 2013.

Other positive indicators included 81 per cent of respondents saying access to finance was no longer an issue, up from only 51 per cent six months ago, and 75 per cent saying they were planning investment.

The survey also found that almost nine in ten businesses (87 per cent) said that maintaining family control of their enterprise was a key success factor.

That view was reinforced by the intentions of those respondents (49 per cent) who said they were considering a strategic change in their operations over the next 12 months.

Only seven per cent of that group were considering a sale, with the remaining 93 per cent planning to keep their business in the family.

The research was based on the responses of 710 family businesses across 18 European countries. It was carried out by European Family Businesses, a federation of national associations representing long-term family enterprises, and KPMG.

Palmers’ expertise in working with family businesses enables us to provide expert advice to support strategic planning, including succession planning for a smooth transition of leadership, either internally or externally.

We can also assist on issues including shareholder and partnership agreements and with family dispute resolution. For more information, please visit our website or contact BJ Chong.

The growth of a fami<!–>ly-run cleaning company has highlighted the potential for success for businesses in the sector.

Edwards Commercial Cleaning, which already employs around 200 staff from its headquarters in Jesmond, Newcastle upon Tyne, announced on 24 March that it would be investing around £500,000 to open a new office in Leeds, buy new commercial vehicles and create 100 jobs by the end of 2015.

The company was founded in 2003 by husband and wife team Paul and Hazel Edwards. Its clients include commercial premises, shopping centres and factories and in the last year created more than 30 jobs and achieved turnover of almost £2 million.

Mr Edwards said: “We’re investing heavily so that we can grow rapidly. It’s a really exciting time for our company.”

For cleaning companies with their sights set on growth and expansion, it makes sense to have access to expert advisers to support them in achieving their goals.

At Palmers, our company law team is experienced in working with cleaning sector businesses and can provide comprehensive advice on issues including terms and conditions of trading, partnership agreements and acquisitions and disposals. We also have particular expertise in working with family businesses. For more information, please contact BJ Chong.