Family businesses are the backbone of the British economy and their contribution should not be overlooked or underestimated, says Mark Hastings
Family firms outnumber others by two to one. The three million family firms in the UK cover all sectors, regions and, just as importantly, all business sizes. Despite being a central pillar of our economy, too often the contribution that the family-business sector makes to the UK economy is not fully recognised.
A growing family-business sector, which generates a quarter of GDP and provides nine million jobs founded on strong values, is essential as the UK looks to rebalance its economy and rebuild public trust in business.
Family firms take a long-term and sustainable approach to business. During the boom years, they avoided taking on irresponsible levels of debt. As a result they were in a better position to weather the economic hardships. During the recession, insolvency levels were much lower among family firms than their non-family counterparts.
Family firms are a barometer for the rest of the economy, while also offering valuable lessons in responsible capitalism from which other business models could learn. The culture and values of family firms focus on serving their customers, their communities and future generations.
We are, therefore, delighted optimism in the economy is returning among family businesses and that they are once again focusing on investment and long-term growth. In an Institute for Family Business survey at the end of 2013, 93 per cent of family firms stated they are more optimistic about the economy than they were 12 months ago. This is replicated in optimism about their own firm’s prospects for growth, with 78 per cent feeling more optimistic than the year before.
Family firms are a barometer for the rest of the economy and offer valuable lessons in responsible capitalism
And this confidence is translating into action and investing for growth. More than 85 per cent of family firms plan to increase their investment for the next year. Hiring and retaining the right people is key for business growth, and 78 per cent of family businesses are this year planning to increase investment in staff training and development.
Family firms survive over generations by staying relevant in the modern world and putting innovation at the heart of what they do, and how they do it. In 2014, more than 65 per cent of these firms plan to increase research and innovation investment, developing world leading services and products.
Family firms turnover around £1.1 trillion in the UK each year. Growth in the family-business sector is not just positive for family firms; it benefits the UK economy, consumers, the exchequer and business as a whole. Family firms demonstrate that businesses, which focus on the long-term picture, have just as much financial success as their quoted competitors, without sacrificing their values, social commitment or public trust.
The 2014 Edelman Trust Barometer found that trust in family-owned firms in the European Union is around 76 per cent, putting the family-business sector ahead of small and medium-sized enterprises, publicly traded companies, big business and state-owned operations.
As family firms plan to grow in 2014, we hope to work more with government and business to rebalance the economy. The growth, optimism and resilience of the family-business model are such that the UK economy cannot afford to ignore this dynamic sector.
Mark Hastings is director general of the Institute for Family Business, and a strategic communications and public affairs professional.