State of the Region: Family firms are ‘the backbone of the economy’

Rebecca Pozzi-Taubert

The sizeable contribution family firms continue to make to the UK’s economy has been highlighted by impressive figures that reveal more than 13 million people are working in them.

Family businesses contributed £598bn to the UK’s GDP in 2017 – 28 per cent of the whole UK economy in that year.

And they also contributed £182bn in taxes, which is more than the NHS annual budget in 2017/18.

These latest figures also reveal there are 4.8 million family-owned businesses in the UK – 85 per cent of all private sector firms.

Yorkshire has the third highest concentration in the country, with 89.1 per cent of all private firms family owned.

The North West accounts for 11.7 per cent of small family firms in the UK.

Elizabeth Bagger, director general of the Institute for Family Business (IFB), which carried out the report, says: “Family businesses are at the heart of communities across the country.

“They are a vital force in our economy too -and how their continued growth will benefit the UK as a whole.

“Family firms clearly have the appetite and ambition for growth. They’re investing in skills and looking to the long term.

“As a country we need to help more of our smaller family firms to overcome the barriers they face, and support them in scaling up and successfully transferring ownership through the generations.

“For those first generation family businesses looking at succession for the first time, it’s important too to realise that you aren’t alone. There are successful, multigenerational family businesses all around the country who you can learn from.

“The family business sector offers so much potential for long term growth. Championing and supporting our mid-sized firms, and helping smaller family businesses to scale up, must be a priority as we look at what our economy will look like in the years ahead.”

The IFB report also reveals that family SMEs are more likely to have female leaders than non-family firms – 81 per cent reported having at least female director, owner or partner.

Rebecca Pozzi-Taubert, IFB communications manager, adds: “On top of their financial contribution to the economy, family businesses have strong a commitment to their employees and the communities they work in.

“They create a greater sense of loyalty and a legacy lasting across generations, which gives them a competitive advantage over non-family firms.

“Having said that the complexity of the family business model creates a unique set of challenges that owners need to be aware of.

“By looking at the long-term and to build stronger businesses for future generations, families naturally have to address questions of governance, succession planning and next generation engagement, to name just a few. Tackling these early on and planning ahead is very important to ensure long term success.

“The good news is that family businesses are well-known to think in quarter centuries, rather than quarters. This has proven to be a great strength in economic downturns and times of uncertainty.”