Family businesses in the UK are booming, with 79% saying their profits are either higher or the same as last year, research by Mazars shows. The research also shows that as many firms are now operated by multiple generations, differences in business views are putting strains on family relationships. The researchers recommend a family ‘constitution’ to combat the stress put on families.
Family businesses in the UK are an increasingly important part of the economy* as they employ a great number of people, pay significant taxes to the UK Government, are ‘long-term’ players and are seen as innovators. “Family businesses are vital to the UK economy so their financial health is extremely important. In terms of employment alone, family businesses contribute 40% of all private sector jobs in the UK and generate £1.1 trillion in annual revenues,” explains Craig Manson, Partner at Mazars responsible for Family Businesses.
In a recently released report, Mazars researches a variety of family businesses in sizes and sectors in the UK. The research finds that despite the difficulties put on businesses by the recession, family businesses in the UK are booming. Almost 80% of respondents say profits are either higher than last year (58%) or the same (21%). More than half (55%) expect the UK economy to further improve in 2015 and their business to grow as a result.
Of the family businesses surveyed, the majority (64%) is still operated by the first generation, with a quarter run by the second generation and 10% by the third generation. According the researchers, as people live longer, more generations can be involved in running the business, resulting in inevitable differences in views.
These different views can make decisions in a family business more difficult, with more than half (59%) of respondents agreeing (47%) or strongly agreeing (12%) that emotional aspects can get in the way of important business decisions. Only 16% disagrees with this statement. As many as 87% of respondents say that the business disagreements put a strain on their family relationships, with 14% strongly agreeing with the statement.
The survey however also shows that the vast majority (69%) of the businesses feel that the attitudes and values shared by families can result in a strong culture within a business, reinforced in a constitution or family charter.
Commenting on these results, Manson says: “The survey reveals that working in the family can create stress within the family unit. These emotional influences can result in decisions that are not easily understood by an outsider. Agreeing a family ‘constitution’ often creates a framework for a more relaxed family and more successful business.”