Francis Clark's survey of family businesses across the South and South West has established that while over 50% of respondents are looking to 'gift' or sell the business to the next generation, over 60% had no plans in place to achieve their expectations.
The survey revealed an underlying optimism within the sector believing that the economy is improving and that profits are on the way up.
More than half of all respondents employed 10 or less people while 30% were in the 10-50 employees bracket. The survey encompassed a wide range of sectors including agriculture, education, food & drink, leisure & tourism, healthcare, manufacturing, renewables and construction.
The survey set out to provide evidence about the main issues confronting family businesses and what they are doing to overcome them.
The standout response undoubtedly concerns the question of succession and the apparent paradox between the desire to pass the business on to the next generation and the lack of planning to do so. This would indicate a general lack of understanding of how complex the process can be and how it can be confounded by family conflict, the next generation not being sufficiently skilled or simply not wanting to work in the family business which can be more demanding than working elsewhere.
Family businesses often evolve with planning confined to the financial rather than the management side of things. Francis Clark's own extensive experience in the family business sector indicates that where governance and management structures are in place including job descriptions, career paths and formalised remuneration packages, the process of succession is greatly facilitated.
However, this latest survey suggests that almost 90% of respondents had no defined plan of this sort, over 70% reported that family emotions have an impact on important business decisions and 32% said that they don't share their plans, hopes and concerns over the future of the business with the younger generations of the family - not really a sound footing for succession.
Family businesses are incredibly important to the regional and national economies providing some 9.2 million jobs or 40% of all private sector employment. However, we also know that only around 30% of family businesses survive to the second generation and 10% into a third and this would imply they need help to establish the tools and the structures to make their businesses sustainable across the generations.