Author: Jed Backhouse

Family businesses have a leading role in shaping a successful future for the UK

Posted on by Jed Backhouse

Neil Davy, Chief Executive of Family Business UK

Over the past few years, we’ve seen extraordinary political change. In my brief time as Chief Executive of the Institute for Family Business, the UK has witnessed four Chancellors, three Prime Ministers, and two Monarchs.

This unprecedented amount of disruption and uncertainty has continued across the business sector thanks to geopolitical instability, a cost-of-living crisis affecting all parts of our economy, as well interest rates and inflation levels not seen for years.

Most recently, low levels of trust in our big institutions, including business bodies, have been rocked even further and left businesses of all sizes wondering where to look for some certainty, a voice, and a hopeful vision for the future.

Even with the Prime Minister’s five pledges set out earlier this year – which include halving inflation–Britain risks merely moving from a position of atrophying to stagnation, or at best low growth.

A strategy for growth

The UK needs to formulate a growth strategy that encourages and incentivises businesses to focus on longer-term investment opportunities and returns for stakeholders, the environment, and the UK’s role and place in the wider world.

Similarly, if the events of the past few months have taught us anything, it’s that the business community and the groups that represent British industry need to work much harder for the businesses they represent if they, and the UK, is to have a prosperous future.

We need to champion the interests of business, but also provide support in helping them grow, and highlight their role and contribution economically, as well as in every aspect of society.  This starts by properly acknowledging, representing and listening to the views of family businesses which operate in every sector and community in the UK.

The opportunity

That’s why, today, we are proud to unveil Family Business UK: a new movement of family businesses advocating for the family business model as a leading example of sustainable and responsible business that should have a stronger role in shaping Government policy and within the UK economy.

For too long, political, industry and business decision-making has taken a restricted approach to investment decisions that responds to the priorities of non-family business PLCs, whose priority is to meet the demands of anonymous shareholders looking for short-term returns on investments.

​There is now an opportunity – and a need – for the voice and model of family business to take centre stage.  Family businesses offer a model that others can learn from, work with, work for, or even adopt.

Family businesses represent the bedrock of our communities, the backbone of our economy and are people-centric organisations.

Our latest research, in conjunction with Censuswide, reveals the majority of the British public would prefer to work for a family business over other business models such as Private Equity, PLCs, and Venture Capital Firms.

Those polled also said they would rather buy from a family business than from any other type of business. They are so much more than short-term wealth creators, but forward-thinking innovators, skill providers, community builders and multigenerational institutions embedded into the history and fabric of British society.

In 2020, family businesses across the whole of the UK generated £575 billion in gross value added (GVA) contribution to GDP (gross domestic product) and employed 13.9 million people.

A positive step forward

It’s time to show the positive impact family businesses have on our society, the economy, and the environment. And it’s time for Government to advocate and support the sector if we want to address and solve the biggest challenges in society and create a more prosperous future for all.

Family Business UK is a growing movement that will champion the model of the family business. They present a leading model of sustainable and responsible businesses that puts the interests of all stakeholders, not only shareholders, first.  I don’t believe they have been properly acknowledged, represented or championed.

Our aim is to support family businesses and the sector to grow and prosper for generations to come; advocate for policies and regulation that incentivise long-term investment and ensure the financial sustainability of the sector; and shift perceptions towards family businesses, and the contribution they make to society.

Family businesses are vital to the long-term strength and prosperity of the UK, and our economy and our communities. For too long their value and contribution has been under-represented and overshadowed. It’s time for that imbalance to be addressed.

 

‘A new vision for the UK Economy’: IFB relaunches as Family Business UK to strengthen ecosystem of support for family businesses across Britain

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  • Family Business UK is a growing movement of family firms seeking to advocate for a stronger role and voice of family businesses whilst providing support to the sector at all levels.
  • The organisation will promote the role of the family business model as a leading example of sustainable and responsible business, working to shift the perceptions and better significant role they play in our economy and communities up and down the country.
  • Launch comes as exclusive polling from Family Business UK and Censuswide found that almost half of British consumers would prefer to buy from a family business.
  • Study also reveals a quarter of the British Public feel the UK Government should do more to promote the family business model within policymaking. Nearly a third (28%) said more support should be given to family businesses.

 

Monday 3 July: After two decades operating as the ‘Institute for Family Business’, today the organisation is delighted to announce it will be relaunching as Family Business UK.

Family Business UK’s new purpose will focus on creating a movement of family businesses that promote the role of the family business model as a leading example of sustainable and responsible business.

The organisation will work to improve the perceptions of family businesses, and better highlight the contribution and significant role they play in our economy and communities up and down the country.

Family Business UK will also support and advise family businesses to invest, grow and sustain for the long-term, helping family businesses of all sizes deal with common challenges across various stages of the business lifecycle.

Sir James Wates CBE, Chairman of Family Business UK, said:

“Our objective is to lead a movement of family businesses working to create a more prosperous and sustainable future for generations to come, positioning family businesses in the UK as an economic force that demands the respect of government and policy makers. We invite all family businesses to join us.”

Kevin Hollinrake MP, Minister for Enterprise, Markets and Small Business said:

“Family businesses play a vital role in the UK economy and are valuable and trusted components of our communities. As a sector that delivers jobs and training to local regions, they employ 13.9 million people across the UK and represent the best of British business.

“I look forward to continued engagement with Family Business UK to ensure that family-owned firms are championed, and can operate in an environment where all enterprises can flourish and grow.”

 Chief Executive Neil Davy said:

“Responsible businesses, like family businesses, need a vocal champion that showcases their strengths, supports them with their challenges and celebrates the role they play in society. As Family Business UK, we are committed to ensure their work and contribution is recognised and supported.”

The announcement comes as exclusive research commissioned by the Family Business UK and produced by Censuswide* reveals that 35% of the British Public would prefer to work for a family business over other business models such as Private Equity (11.4%), PLCs (13%) and Venture Capital Firms (8%). Those polled also said they would rather buy from a family business (44%) than from any other type of business.

Regional Breakdown

The regions where consumers said they would want to buy from a family business

Region Preferability
Scotland 51%
South West 48%
South East 47%
Yorkshire and Humber 46%
North East 44.1%
West Midlands 44%
North West 42%
East Midlands 42%
East of England 40%
Wales 39%
London 38%

 

Chief Executive Neil Davy said the re-branding to Family Business UK will better reflect the organisation’s focus and goals whilst championing the interests of its members, provide additional support and highlight the wider role of family firms in society.

Family Business UK believes that for too long, political, industry and business decision-making has taken a restricted approach to investment decisions that responds to the priorities of non-family business PLCs, whose priority is to meet shareholder demands for short-term returns on investments.

Family businesses offer a model of business that put people at the centre of decision making, see values as an asset, have greater freedom to experiment and innovate and, ultimately, takes a long-term view, putting the interests of the next generation at the heart of businesses.

The UK needs to formulate a growth strategy that encourages and incentivises businesses to focus on longer-term investment opportunities and returns for stakeholders, the environment, and the UK’s role and place in the wider world.

This starts by properly acknowledging, representing and listening to the views of family businesses which operate in every sector and community in the UK.

Censuswide research also reveals that the British Public believe family businesses have the best business model for putting people at the heart of business (24%) when compared to other models.

Family Businesses also take the most local approach and are seen as the leading model for companies prioritising investment in their local communities, according to the study.

Overall, a quarter of the public felt that the UK Government should do more to raise awareness and promote the family business model within policymaking, with nearly a third (28%) of those polled saying more support should be given to family businesses. This included cutting Business Rates (27%), introducing new policies that help owners pass their business to the next generation, and also appointing a Family Business Minister in Government.

In 2020, family businesses across the whole of the UK generated £575 billion in gross value added (GVA) contribution to GDP (gross domestic product), and employed 13.9 million people.

This means that family firms comprised 85.9% of all UK firms, directly generated 44.4% of GDP, and were responsible for 51% of all private sector employment in the UK economy in 2020.

 

Business community must rediscover purpose in wake of CBI affair

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Sir James Wates, Chair of Family Business UK

The events of the past few months have shown clearly that groups representing British industry cannot take their influence and status at the top table for granted. Although the narrative surrounding the CBI’s struggles has focused on safeguarding of staff, I would argue that the cautionary tale is more about failure to deliver on organisational purpose.

Of course, the CBI is right to be addressing the past cases of misconduct, and judging from the membership support for its new plan, there is sufficient confidence in its ability to fix its people culture issues. This is a good start in its road to recovery.

However, even more fundamentally, the CBI is in danger of failing to deliver on its purpose. If the organisation doesn’t carry out its reforms successfully to deliver on its core mandate, others such as the Business Council proposed by the British Chambers of Commerce will look to plug the gap as the representative voice of business.

“Purpose and Leadership” features as the first of six principles in the Wates Corporate Governance Principles for Large Private Businesses, developed in 2018 as a tool for companies to use in guiding and reporting on how they are governed. It’s absolutely vital that companies are clear about the purpose of their existence, how their strategy serves to accomplish it, and how organisational culture supports it all.

The principle applies to trade bodies, as well as to individual companies. In my mind, the CBI’s purpose is to be a conduit of information between government and business – effectively representing the interests of the broader business community to government at the most senior levels. This must guide its strategy, and be the ultimate criteria on which the CBI’s success is measured.

While other trade associations will continue to represent their specific interests, sectors and models, the CBI must again find a constructive way to represent the macro – bringing together this plurality of voices in a coherent and effective manner.

In a broader sense, the business community needs to do better at communicating the value that the private sector generates for society, and the CBI needs to be leading this call. Generating wealth is not just for shareholders; the private sector generates taxes (either directly or indirectly) that account for three-quarters of HM Treasury’s revenue.

The fundamental role of business in society is something we’ve been reflecting on deeply at the organisation I chair, the recently re-branded Family Business UK. As Family Business UK Chief Executive Neil Davy told the Times, business groups need to make themselves relevant to the needs of everyday people, and properly articulate and prove why it is they deserve to have their voice heard in the wider conversation about how society is governed and structured.

From my many years working in the family business sector, I’ve seen first-hand the exemplary ways in which family firms have built long-lasting ties between business and community. Creating jobs for the long term; supporting local people through difficult times; and taking the necessary steps to make their businesses more sustainable and play an active role in creating a Net Zero economy. These are the basics on which long term trust and purpose are built.

The ethics and values of each family are baked into their business – in how they govern themselves, how they communicate with staff and other stakeholders, and how they invest for the future to create wealth benefiting all of society.

Family businesses are the bedrock of the UK economy – representing five million businesses, supporting around 14 million jobs, generating more than a quarter of GDP, and contributing almost £200 billion in tax.

Recent polling commissioned by Family Business UK found that the British public find family-run businesses to be the most trustworthy companies (25.4%) when compared to PLCs (14.7%), venture capital firms (7.6%), and private equity backed-companies (9.8%).

In addition, the polling showed that the public believes family businesses look after their employees equally as well as employee-owned organisations.

Family businesses want to continue to thrive and deliver on what the public trusts them to do – to treat stakeholders fairly and to generate value for society. Our objective at Family Business UK is to lead a movement of family businesses working to create a more prosperous and sustainable future for generations to come, positioning family businesses in the UK as an economic force that demands the respect of government and policy makers. We invite all family businesses to join us.

 

Family businesses flock to Glasgow for landmark business event

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Hundreds of family businesses will gather this week as the annual IFB National Family Business Conference, which kicks off on 14 June, comes to Glasgow for the first time

The three-day event will see family firms of all sizes and from every sector within the UK meet up to discuss the future of the family business model and how family businesses innovate and invest to support the next generation of businesses and their leaders.

In Scotland, there are more than 280,000 family businesses – around 84% of all businesses in Scotland.  Together they employ 874,000 people.

The conference will bring together family firms from across the country to share and learn together, while showcasing some of Glasgow and Scotland’s family business success stories.

Alongside the conference, the IFB is restating the case for why family business should not be overlooked, and the central role they have to play in creating prosperous communities.

Exclusive research commissioned by the IFB and produced by Censuswide*, of more than 2,000 respondents in late May, found that the British public find family-run businesses to be the most trustworthy companies (25.4%) when compared to PLCs (14.7%), venture capital firms (7.6%), private equity backed-companies (9.8%).

In addition, the polling found that the public thought family businesses looked after their employees the most compared to other business models apart from employee-owned organisations, which scored the same as family-run businesses (27.2%).

Family businesses also scored highly when it came to customer service, with over 21% of respondents associating the companies with the phrase ‘have great customer service’ and are seen as the most trustworthy businesses in Scotland (23.5%).

In 2020, family businesses across the whole of the UK generated £575 billion in gross value added (GVA) contribution to GDP (gross domestic product), and employed 13.9 million people.

This means that family firms comprised 85.9% of all UK firms, directly generated 44.4% of GDP, and were responsible for 51% of all private sector employment in the UK economy in 2020.

The conference attendees will hear how a thriving family business sector is essential to achieving a more prosperous society with long-term sustainable growth. Family businesses offer a model of sustainable and responsible business that others can learn from, be part of, work with, or even adopt.

 

Chief Executive, Neil Davy, said: “We are delighted to bring the UK’s biggest family business conference to Glasgow for the first time this week.  As well as celebrating some fantastic local firms, it’s an opportunity to come together to share their experiences and have their voice heard.

“For too long, political, industry and business decision-making has taken a restricted approach to investment decisions that responds to priorities of non-family business PLCs, whose priority is to meet shareholder demands for short-term returns on investments.

“The UK needs to formulate a growth strategy that encourages and incentivises businesses to focus on longer-term investment opportunities and returns for stakeholders, the environment, and the UK’s role and place in the wider world.

“That starts with listening to the thousands of family businesses in Scotland and across the UK and supporting them in making day-to-day decisions that encourage them – and gives them the confidence to invest – while also helping to tackle wider challenges like revitalising our high streets, creating job opportunities and improving everyone’s livelihoods.”

 

Family Business Debated in Parliament

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To celebrate a second successful Family Business Week, on 20th December MPs from across the House debated the contribution of family businesses to the UK economy and to communities throughout the UK in Westminster Hall.

The debate, which was secured by APPG for Family Business Chair John Stevenson MP, saw MPs highlight businesses from their local communities, as well as talking about the important contribution firms make, and highlighting challenges facing businesses at the moment.

 

Importance of the family businesses sector:

  • Dr Lisa Cameron MP said family businesses are the bedrock of our local economies and asked ‘Does the Minister “agree that, with the correct package of support, financial innovation, contribution and development from the Government, family businesses can become iconic and international successes?”
  • John Stevenson MP echoed this, adding that “Family businesses are clearly the backbone of local economies up and down the country as well as nationally’. He later suggested in the debate, ‘family businesses provide an extra layer of benefit in terms not of the economy but of the community. Family businesses are often embedded in their community.”
  • Jamie Stone MP reiterated this sentiment, saying: “The local contribution of family businesses is crucial. They tend to use the local bank. They mostly use a local solicitor, [and] a local estate agent.”
  • Kevin Foster MP warned that “without family businesses, we would all be poorer, not only in the sense of the jobs and economic activity they create, but in the sense of the social responsibility that many show simply by wanting their businesses to be positive parts of the communities they are proud to call home.”

 

Celebrating family businesses:

  • Jim Shannon MP shared that “when an enterprise is built on familial lines, people are more likely to put in extra hours and go the extra mile to ensure success, and the stability of the family structure has been pivotal for long-term family professions.”

 

Investing In Family Businesses

  • Jim Shannon MP proclaimed that ‘”the support provided by the public to keep these enterprises open is incredibly important, and we do our best to help and support all the businesses that make our economy what it is today.”
  • Wendy Morton MP called for government to ‘invest more in [family businesses]… adding that: “not everybody will be a scientist or a researcher. We need manufacturers and family businesses… if we grow our family businesses, they can invest in their business and their skills base, and that is what creates the jobs of the future.”
  • Seema Malhotra’s recommendations for government support of family businesses were as follows: “we need to deliver macroeconomic stability, and respect our institutions, such as the Office for Budget Responsibility. We need to make importing and exporting easier. We should also have a proper industrial strategy, backed by ambitious investment, that makes decisions for the long term. We also need a plan for reform of business rates, because so many businesses are concerned about the unfairness of business rates.”

 

You can watch the debate here or read the Hansard transcript here.

Family Business Week 2022

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Celebrating and supporting family firms during the cost-of-living crisis

A week-long campaign aimed at highlighting the UK Family Business sector during the height of the cost-of-living crisis will take place this week.

The Institute for Family Business (IFB) will host its annual Family Business Week (FBW 2022), in partnership with NatWest. As businesses across the UK face a difficult winter caused by rising energy prices, the IFB is championing the amazing work family businesses do to foster economic growth and the role they play in shaping the fabric of their local communities and regions.

As part of Family Business Week, which will run from Monday 21 – Friday 25 November, the IFB will work with the Government to ensure that business support is directed towards those organisations at risk from closing as a direct result of the cost-of-living crisis.

The week-long celebration will also include several business events hosted by the IFB, as well as MP visits to family firms and panel discussions around the theme for this year’s FBW. Now more than ever it is important to celebrate family businesses’ place in the world and highlight the vital role that they have played in helping communities rebuild following the pandemic and how they are supporting their local areas during the cost-of-living crisis.

This year’s campaign follows on from the success of Family Business Week 2021, which highlighted the role of family businesses in supporting local communities during the pandemic. Around five million UK family businesses, providing jobs for 14 million people, were the backbone of the economy and the bedrock of as the country went through numerous lockdowns.

Ahead of FBW22, family businesses from across the country will be sharing their stories of how they are supporting their employees and local communities during the cost-of-living crisis. They will showcase the valuable role that family firms are playing to tackle the climate crisis/creating a more energy efficient economy by making their businesses more sustainable and growing the UK economy.

Neil Davy, Chief Executive of the Institute for Family Businesses (IFB) said:

“We are very proud to celebrate family business’s place in the world and illustrate how they are the backbone of local communities and integral to the growth of the economy. We started Family Business Week to highlight the immense role that family businesses played supporting people and communities during the pandemic. However, this year’s campaign is perhaps even more urgent as thousands of family businesses face skyrocketing energy bills and are worried about how they will survive. Family Business Week 2022 is about ensuring the Government realise business support is needed in order for firms to survive the winter months.”

Fiona Graham, Director of External Affairs and Policy, said:

“This winter, family businesses will be doing everything they can to survive, support their staff and help the local community. It is now more important than ever that we celebrate the vital contributions of the family business sector. We also need to make sure they have the necessary help to continue to prosper. Throughout the week, we’ll be showcasing how the sector is supporting the country over the difficult months ahead. The IFB will be providing opportunities for businesses to talk about these issues with political stakeholders at both a local and national level”.

PM meets family businesses to discuss economic recovery

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Prime Minister Boris Johnson yesterday applauded the crucial role that family businesses have to play in the economic recovery from COVID-19, and beyond.

Hosting an exclusive roundtable for family businesses, representing a variety of  sectors, the Prime Minister and Business Secretary Kwasi Kwarteng heard how family businesses have been responding to the pandemic, and the essential part they have in supporting their local communities.

The roundtable also focused on the importance of sustainability as a core value of family businesses and how the sector can contribute to the government’s Net Zero ambitions, with COP26 just around the corner.

In attendance was IFB Chairman Andrew Osborne, who said:

“We welcome the Prime Minister’s recognition of the immense contribution that family businesses make to the UK economy, and the local communities in which they are so deeply rooted.

“In its 20th year, the Institute for Family Business will be championing family businesses and their vital role in building back better from the damaging effects of COVID-19 and leading the way on the journey to Net Zero. We were delighted to make this case directly to the Prime Minister.

“We look forward to working with government to deliver a more sustainable world for future generations. “

The latest Institute for Family Business Research Foundation Sector Report highlighted that there are over five million family businesses across the UK, employing over 14 million people.  Family businesses have been severely impacted by the pandemic, with the report finding that family firms’ outputs declined by up to 30 per cent, with businesses in the entertainment, hospitality, and food services sectors facing the most significant challenges.