With almost two thirds of UK SMEs being family owned and run, the country’s economic future is hugely reliant on the success of such firms. With an estimated three million of the country’s 4.6 million SMEs run by families, it is clear they form the backbone of any economic recovery as drivers of enterprise, entrepreneurship, and commerce.
With such a huge number of small firms acting as the muscle for the UK economy, it’s in everyone’s best interest for these businesses to grow, flourish, and be able to trade to the best of their ability. These are the wealth generators of the country, and they need to be nurtured and assisted in every way possible.
The importance of family run firms really should not be underestimated – we need to start seeing growth in this area as being intrinsically linked to the future health of the UK economy. Take Germany for example: there family businesses contribute to 49% of GDP – this figure in the UK is around 31% at the moment.
If you look at the number of family firms which make it past second generation of ownership, current figures put it as low as one in five. We need that figure to improve, and succession planning is certainly a tool which will allow firms to go further, longer and be more successful.
If even a small percentage of family firms were able to carry on trading as opposed to either being sold or simply being wound up once the first or second generation retires, it could make a world of difference to the UK economy.
In the UK it is estimated that there are just over 1,000 family firms with more than 250 employees, most are sold long before they get anything close to that size of operation, often because there is not the experience within the family to take the business forward.
Tim Isherwood from Steuer Gregsson said: “From our experience we know that one of the main concerns for family run businesses is about the ability to pass it on to the next generation. But in the same breath many owners of such firms will often admit to doing nothing about it, either because they don’t know how to approach the issue, or they simply haven’t thought about it.
“It is a huge issue though, and one firms ideally have to get right the first time. It’s not something that should be put off either. Regardless of their size, family businesses need to be planning their management succession from the day they begin trading.
“All too often those that don’t become a victim of their own success and when the time comes, a successful, expanding business has no one to take over at the helm and it’s lost. It may sound daunting but help and assistance is out there. If you don’t plan, it won’t happen. Get it right though, and a business is far more likely to succeed past the second generation.”