Almost a third of Britain’s family-run business owners fear their company will die out once they retire, as new findings suggest younger generations aren’t trusted with taking the reigns in future.
After polling the heads of family businesses and analysing Companies House data, Direct Line for Business was able to highlight the imminent threats facing family-run enterprises.
The greatest fear, cited by almost four in ten respondents, was that their family would not have the necessary skills or will to carry on the business in future. Meanwhile, a third believed that younger family members were either not interested in running the company or would make changes that they would not agree with.
Respondents also cited the inheritance tax system, which penalises those seeking to pass down their firm, as an unfair disadvantage to running a family business.
The own entrepreneurial ambitions of young people could also put the legacy of a family business in doubt. Researchers found that one in seven university undergraduates planned to start their own company after graduating.
The concerns of family business owners in 2017
|Concern||Percentage of family business owners who have this concern|
|My family will not have the necessary skill/ambition to continue the business||38 per cent|
|Young people are not as interested in pursuing the family business as they were in former generations||33 per cent|
|I’m worried that young generations will make changes to the business that I wouldn’t agree to||33 per cent|
|Inheritance tax rules make it very difficult to pass on a family business||33 per cent|
|My family business will die out after I retire||29 per cent|
|It is unlikely that any family businesses will exist in future||21 per cent|
Companies House registrations
Analysis of Companies House data also suggested the UK’s 18,341 family firms reflected business world of a different era. A vast majority of 18,020 were listed as “and son”, with just 290 firms registered as “and daughter”.
Commenting on the findings, Jane Guaschi, business manager at Direct Line for Business, suggested a stronger presence of women in senior business positions would help diversify the population of family enterprises.
“Family businesses are a huge contributor to the UK economy and it’s great to see so many companies feature relations working together to generate an income,” she added.
Guaschi maintained that embracing the family business still created “unique opportunities” to young people, but accepted that future-proofing the company was likely to keep owners awake at night.
“A succession plan is essential,” she said.
According to the Institute for Family Business, family-run firms contribute £460bn to the UK’s GDP, employ over 12m workers and contribute £133bn to the UK government in tax revenues.
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