Over one-third of the owners of British family firms lose sleep worrying about who will take over the reins when they retire, according to new research by asset management firm Close Brothers.
Concerns about succession planning came second only to current profitability in a list of the most stressful business issues family firm leaders are grappling with.
Developing the skills of the the next generation and engaging them in the business also features heavily on family entrepreneurs’ minds, with 35 per cent citing this as a key worry.
“UK small business owners face a multitude of challenges and the leaders of family-owned small firms can have an especially hard time navigating regulation and adapting to changing policy while remaining loyal to their unique set of family values. Beyond that, all this must be done while running a profitable business,” said Penny Lovell, head of private client services at Close Brothers.
“Succession planning is naturally a significant concern for family businesses and requires careful consideration. Not only must owners consider developing their replacement, and ensure family values are adhered to, they also must plan for their own retirement,” she added.
Family-owned firms generated £1.3tn in revenue and contributed £125bn to the UK Treasury in tax revenue in 2014, according to additional recent research published by the Institute for Family Business (IFB) in April. These companies also provide employment to almost 12m people.
At a reception recognising the contribution of such firms to the economy in November 2015, MP John Stevenson highlighted the need for legislation designed to help owners overcome some of these challenges. “Family businesses play a huge role in both our economy and their local communities,” he said.
“I am keen that family business owners continue to engage with parliament and government to ensure that there is legislation that specifically assists and recognises the contribution of family businesses throughout Britain,” Stevenson added.
Preparing to pass on the business to the next generation was high on the agenda when Business Advice sat down with some of Britain’s most inspiring family businesses last year to hear about the benefits and challenges of running an enterprise with relatives.
Stefano Cuomo, whose daughters are both under five, was already thinking about succession planning when we spoke to him. “I aim to be transitioning the business to them in the 23 years time,” he explained. “I don’t think that family businesses should be imposed on the next generation, but they need to be very clear that once it has gone there is no getting it back.”
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