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Social changes and next generation planning are top challenges for family businesses

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13 October 2016

Social changes and next generation planning are top challenges for family businesses

 

Latest research led by one of the UK’s top advisers to the family business sector reveals a growing mix in the family members in control of the family firm, and that succession is missing from any form of future-planning strategies for 95% of family businesses.

 

The findings of the fourth annual study of UK and global family and owner managed enterprises by the sector’s leading support group Families in Business (FiB), show a rise in the number of family firms with ‘blended families’, with nearly a third now having step-children or step-parents involved. It also reveals that more than a quarter (26%) have women as their MD or CEO, six percent higher than in the research findings in 2015.

 

97% of family business owners admit to a lack of direction and purpose for their business, and that challenges around achieving a balance between work and life are contributing to the absence of succession planning admitted by 95% of family business owners.

 

CEO of FiB Dani Saveker has specialised in advising family businesses for over a decade and has first-hand experience of running a family business. She lectures on her extensive knowledge of the global family business sector at Warwick Business School.

 

As well as creating FiB, Dani has pioneered the annual study, the findings of which are at the heart of a ground-breaking Guide for Family Businesses ‘Beyond Business’, published this month.

 

Commenting on the study’s findings, she explains: “The changing face of the modern family is reflected by the diversity of family members working in the business and growing numbers of step and adopted children joining the company following divorces and second marriages – 31% of family firms have these ‘blended families’ working together, compared to 25% last year. Increasingly, family members have struggled to balance work, life and family, so have had children later, which has led to a generation gap. And other firms are finding they have to deal with their families spreading out to live and work across the country, or even internationally – or the impact of younger generations wanting to pursue multiple careers in the lifetime.  

 

“In particular, our 2016 survey of global family firms has also uncovered what is fueling or holding back business growth, and ‘change management’ continues to be one of the top issues they face. Just 5% have a succession plan in place and 17% a Shareholders Agreement, despite 9% of the current managing generation admitting they are worried there is no one to pass the business onto,” says Dani.

 

Key Findings:

 

  • 97% feel a lack of balance in their life
  • 95% have no clear and defined succession plans
  • 86% have a lack of focus or purpose in their life
  • 79% of family business owners admit they are frightened and worried they are not good enough to run the business
  • 63% believe people care less about each other than ever before, despite being better connected through technology
  • 62% rely on something to cope (such as smoking, alcohol, or food)
  • The biggest challenges for families working together in the business are communication (66%), succession (58%), communication (54%), and direction (42%)
  • 48% are cautious about the next 12-months, compared to just 10% in 2015
  • Sales & marketing (68%), direction & strategy (60%) and skills and talent (58%) are voted the biggest business challenges for family businesses
  • 39% of family firms admit that working with family puts a strain on their relationship.

 

Dani explains that FiB’s Annual Guide is intended to support family businesses to develop strategies to unlock their business’ potential: “To unlock the business and the potential within it, you have to go beyond it. A business is a vehicle to deliver wealth, satisfaction, legacy and freedom and yet we so easily get caught up in the day-to-day challenges. When you work with family, you have the added emotions associated with responsibility, duty, being good enough and making the right decisions, as well as managing expectations and family dynamics.

 

“Alongside the findings of the research, the Guide therefore provides practical ideas, methodologies and tools to help family owners make a start with positive changes. I hope the Guide will help start conversations and identify where ‘blockages’ and challenges may sit, and provide some comfort and reassurance that on-one is alone, and how one person maybe feeling in their family business is more common than they perhaps realise.”

 

The Guide also marks the launch of FiB’s Global System framework for family firms: “The result of more than 20-years of research, work and personal experience, the Global System is a detailed framework to help family and owner managed enterprises find alignment, to enable decisions, progress and growth,” explains Dani. “In a fast-changing world, creating and maintaining alignment is vital; the Global System works to achieve this for a business and every aspect of life.”

 

Guest contributor to the Guide is Bruce Oldfield, OBE, one of Britain’s most successful fashion designers and Honorary Vice President of Barnardos, FiB’s charity of the year. In his Foreword, he says: “Having a clear sense of identity and purpose is a fundamental component for success and happiness. Family doesn’t have to mean the people you share DNA and blood with, but more so those that care and support you, allow you to be the best version of yourself, and give a belief in what’s possible.”

 

The Guide also includes contributions from author Dr Mark Goulston, a regular contributor to Harvard Business Review and Huffington Post, and Lesley Wild, Chair of the Board at family-owned business Betty’s and Taylors Group.

 

Contact FiB office@fibcommunity.com to request a copy of this Fourth Annual Guide and visit www.fibcommunity.com for more information about FiB.

 

Now in its fourth year, 2016 is the first time FiB’s annual research study into enterprise, business and entrepreneurship has been carried out worldwide, with 250 UK and 1000 global businesses, including from Australia and Canada, taking part this year.