Open and trusted communication within the families working in a family business is a major challenge for over half of the UK’s family run or owned companies, according to a recent survey. Conducted by Families in Business (FiB), the national organisation that provides consultancy, support and membership to family businesses and their owners, the 2014 Annual Survey identifies the main professional and personal issues affecting the individuals working in a family business.
Open and a trusted communication is a major challenge for 58 percent of family businesses, and specifically tackling issues such as succession and shareholder agreements with family colleagues are regarded with trepidation for 69 percent of those asked. According to the survey, only 16 percent of family businesses have a full and protected shareholders agreement, and 30 percent believe they don’t need one at all. Over 70 percent of family businesses have no formal succession plans, with just 5 percent having a formal plan in place, and 22 percent admit they don’t believe one is necessary.
Achieving a work life balance is also a major issue for family businesses, with 76 percent stating their ability to achieve it is a significant source of stress, worry or ill health. The survey also sought to establish if family businesses are mirroring the changes in society in areas such as ‘blended families’ – those with step families, in second marriages, or with adopted children – and the growing numbers of women focusing on their careers first and having children much later in life. The survey found that whilst many more women are entering their family’s business, the dominant leader remains male at 84 percent, versus just 16 percent having a female as their most senior executive.
The survey also revealed that 43 percent of family businesses only have family members on the Board, and confess that this is preferable. Incentivising non-family executives in the business continues to be a hurdle for the majority of family businesses, and the survey highlights that 92 percent of shares are held by the family, with the balance of just 8 percent held by non-family members. The survey also explored how family firms view their professional advisers – an integral element of the FiB community which has a growing network across the UK of family business focused advisers.
Family businesses were asked to rate the level of satisfaction, and the majority ranked accountants as the best performing professional advisers, but say they are least satisfied with wealth managers or IFAs. When asked about the management of business finances, 45 percent of respondents stated that a family member acts as Finance Director with 22 percent not having a FD function of any type.
“It has never been more important to educate and raise awareness within family businesses on the importance of remaining relevant, putting suitable protection in place for the family, individuals and business, creating solid contingency plans and ensuring succession is on the agenda,” comments FiB CEO Dani Saveker.
“Family businesses have demonstrated exceptional resilience during the challenging economic conditions, are now more positive about the future than their non family counterparts, but our survey confirms that many continue to experience the same issues and hurdles of past generations of family businesses.”
Family businesses from across the UK took part in the survey, representing all industries and market sectors, second to tenth generation family firms, ranging in size from £1million to over £100 million annual turnover. “FiB places great value on providing family businesses with the very best, relevant guidance and practical advice to secure the future of all family businesses,” Dani continues, “and the 2014 survey has formed the basis for our 2014-2015 Annual Guide that is designed to achieve this. It provides sound, focused, easy to follow or consider points that are important for many individuals in the business or family.” The FiB Annual Guide covers the survey’s finding in five core areas for family businesses, along with practical advice from FiB and its advisers. FiB members receive a complimentary copy of the Guide and family businesses can request a copy; family business and adviser members can access tools specifically designed to assist in some of the key areas through out the guide - for more information, email: firstname.lastname@example.org.