Our economy is underpinned by thousands of smaller family owned businesses, many of which are in their first generation. Although they provide valuable employment and collectively generate significant tax revenues, they can often face a daily struggle to survive.
Statistics have shown that family businesses can sometimes struggle to continue into the next generation. Our joint survey with the University of the West of England Business School revealed 38% of family businesses are in their second generation of family ownership and 17% in the third or beyond. Other surveys have revealed similar results.
However many current or formerly family owned businesses stand out in the UK corporate landscape as established institutions. Sainsburys, Warburtons, JCB and Yorkshire Tea are just a few examples.
So, what makes the difference between the family businesses that merely survive and those that thrive in successive generations of family ownership to become institutions?
The answers, of course, are as complex and varied as the families and businesses concerned. But there are two constants.
First, planning across various dimensions. Most obviously, business planning aimed at the long term sustainability of the enterprise, but planned in parallel with personal finances to achieve the balance between the needs of the business and various family members, spread across at least two generations.
Secondly, communication. This can often be the hardest part.
It is only with open, honest and constructive dialogue involving the wider family, including those not working in the business, that is magic ingredient will emerge. The family will have developed a dynastic intent and a commitment to build a family business institution.
The succession process is anything but straightforward. However with sound planning, underpinned by good communication, empathy and understanding, business families can build something truly worthwhile.