Family owned businesses have been largely neglected by UK policy despite their vital contribution to the UK economy, according to research conducted by Credit Suisse.
The research showed that the UK is lagging behind the rest of Western Europe as family-owned firms comprise only 8% of British businesses. In contrast, Germany and France have a much higher proportion of family run companies, with 36% and 30% respectively.
The report’s authors say an increasingly diverse ethnic mix is playing an increasingly important role in the stimulation of family-owned companies as 66% of ethnic minority businesses are family owned.
However, family-run businesses are floundering when it comes to retirement for the founders. In the UK, 42% of these entrepreneurs say they have no fixed succession planning for when they retire and for those who have, only 27% plan on keeping the business in the family. It comes as no surprise then that only 16% of such enterprises have been family run for three or more generations.
Despite this, the report suggests that family firms are lagging behind in business survivorship rates because they are more likely to take a long-term and less aggressive view of business development.
Michael O’Sullivan, head of UK research for Credit Suisse’s private banking businesses, said UK plc needs to realise the importance of family-owned firms to the economy. He also said the UK would be well-advised to follow its European neighbours’ lead.
“Ultimately, one of the reasons for the relative stability of larger economies in continental Europe is the significant presence of family businesses which, at least on a stylised basis, tend to be less leveraged and generally have a longer-term focus on investment and innovation,” O’Sullivan commented.
© Crimson Business Ltd.
