Cautious optimism of family businesses revealed by PwC survey

A NARROW majority of family business owners think the UK business environment will get better over the next five years, according to a PwC survey of its Midlands Private Business Forum members.

Fifty four per cent showed cautious optimism about the economy, but more than 40% expected no change.

However, most were bullish about prospects for their own business, with 79% reporting that they were in better shape than before the start of the economic downturn.

Despite all the issues thrown up by the economy, the traditional concern of family businesses – succession planning – remained uppermost in the minds of most business owners. More than 80% identified the issue as criucial to the long-term success of their businesses.

Current priorities thrown up by the downturn included maintaining revenues (29%), managing or reducing costs (25%), managing working capital and raising finance (21%). 8% also said that managing risks associated with customers or suppliers failing was a priority.

The biggest challenges as companies emerge from the downturn are growing revenues (38%), continuing to manage costs (17%), keeping and attracting talent / staff (17%), competition (eg from emerging markets) (10%), increased regulation (10%) and access to finance (6%).

The ability to raise external finance was important to the longer term aspirations of 60% of family businesses in the region, but one in three (39%) said it was not important.

Despite the current challenges, the survey showed that private businesses were often more engaged with issues outside their businesses than leaders in other sectors, said Chris Romans, partner at PwC in Birmingham.

Significant numbers expressed concern over HS2 and the creation of Local Enterprise Partnerships. 45% of family businesses regard HS2 as important or critically important to the longer term success of the region, but  36% are less certain and are unsure about what benefits it could bring.

More than 60%  believe local government policy and LEPs in particular are important or critically important to the longer term success of the Midlands economy.

Mr Romans said: “This interest is demonstrated in the composition of the business boards of many of  the local LEPs. In Coventry and Warwiskhire, you have Sir Peter Rigby and Denys Shortt at the helm, and Stewart Toye in the Black Country. I think this shows a level of investment in the wider community by private businesses that fgoes beyond bottom-line concerns.”