Family firms ‘stronger’ after recession – PwC

FAMILY businesses in the Midlands are coming out of the recession stronger than they entered it, according to a survey of private business owners by PwC.

The firm’s Private Business Forum asked owners to identify their key issues as the economic climate changed and to indicate their level of confidence in the future.

The survey was held to coincide with the latest Forum dinner, held at Swinfen Hall, where entrepreneur Sir Peter Rigby was the main speaker, and 30 business owners discussed their concerns and the outcome of the survey.

The survey results and its analysis by PwC is the subject of a series of articles on TheBusinesDesk.com this week.

Almost 80% of businesses polled said they were stronger now than when they entered the recession. PwC partner Chris Romans said the message was that businesses had been forced by the recession to reduce costs, improve operating efficiency and in many cases concentrate on core business activities at the expense of lower margin operations.

He said: “In the downturn, businesses have been concentrating on managing costs, risk and cash. In some cases businesses say the recession has been a blessing in disguise. Many are emerging in much better shape.”

The cash profile and low leverage of many private businesses could also see many pursuing growth through acquisition, he said.

“Private and family owned businesses are normally cash-rich,” he said. “They’re often reluctant to borrow to finance activities so the recession gives opportunities to acquire because of their strong balance sheet and cashflow.

“This trend is also driven by the tax disincentives given to entrepreneurs to take their cash out of a business. They are now more likely to see their cash pot grow by leaving it in a business or using it to fund acquisitions.”

The wide-ranging survey also found that 45% of family businesses regarded the controversial HS2 project as important or critically important to the longer term success of the Midlands, although 36% are less certain or unsure.

Tomorrow, we look at why private businesses are rating innovation and succession planning among their top considerations.