Family owned businessess stronger than ever
FAMILY businesses in Yorkshire are in a strong position to survive the economic downturn, according to a new study.
Research by Barclays Wealth and the Economist Intelligence Unit (EIU) suggests that certain characteristics such as a low risk approach, long term view and lower borrowing will help them beat the recession.
Comparisons between family and non-family businesses’ motivations were telling, revealing that family businesses were likely to have a conservative strategy.
Family businesses in the region were less likely to enjoy risk with 22% saying the enjoyment of risk was their most important motivation, compared to 30% for non-family businesses.
Family business respondents demonstrated that their motivations were less driven by financial returns than non-family businesses, suggesting that they take a more holistic view.
Only 42% identified the enjoyment of making money as a motivation, compared to 52% of other businesses.
Respondents identified the strong support network from family members (48%), followed by the values and ethos shared between family members (39%) as the two most important advantages of being a family business.
Other positive traits identified by the report include strong leadership values and a closely knitted management team.
Experts are now advising firm to adopt the family business model to help improve their chances of survival.
Andrew Houston, regional director of Barclays Wealth in the Midlands and the North said that the report gave a very interesting insight into the mentality of family businesses in the region and that a lot can be learnt from them.
“Businesses can often be forced into knee-jerk reactions when faced with a challenging and unfamiliar environment, but this can often exacerbate problems,” he added.
A longer term view, less debt and an experienced management team are just a few of the factors which provide stability and minimise vulnerability in testing times.”
John Good, director of Bradford -based John Good Shipping, said he agreed with the report’s findings.
“This report is a real boost to the family business model and justifies the decisions we’ve made with the long-term goal in mind,” he said.
“Although things aren’t easy at the moment, I’m confident that our approach put us in a position to emerge from the downturn in good shape.”
The study also suggests that family businesses in Yorkshire will play a key role in community support during the downturn, when personal giving and wider corporate contributions are heavily impacting charities, foundations and non-governmental organisations.
Family businesses cited their most important motivation as the ability to help others (55%), compared to non-family businesses at 39%.
Commentators have suggested that family businesses are less likely to make redundancies, seeking other cost saving measures such as reducing salaries and suspending dividends instead.
According to the Institute of Family Business, family-owned firms account for an estimated 65% of the 4.5 million private sector enterprise in the UK economy, contributing 31% of gross domestic product and accounting for more than 40% of private sector employment.
The global survey – the eighth report in the Barclays Wealth Insights series – polled 2,300 wealthy investors, of which almost 300 were family businesses.