Succession planning 'major worry' for family-owned SMEs
Four of the top 10 worries for family business owners are related to succession planning, according to a new report.
The research from Close Brothers Management, conducted by Family Business United, surveyed family and small business owners to find out what worries kept them awake at night.
Unsurprisingly, company profitability and the day to day running of the business was the number one worry, with 40% saying that it was a key concern. However, nearly half of the top 10 answers directly related to succession planning, with 39% of respondents identifying the process as a worry. Trying to develop and engage the next generation of business leaders caused 35% of owners to lie awake at night.
Top ten worries for family business owners
- Continuing to develop and remain a profitable business
- Management succession planning
- Red tape, regulation and legislation
- Planning for later life
- Engaging and developing the next generation
- Ownership succession and developing responsible future owners
- Identifying and maintaining family values
- Extracting value from the business
- Developing effective marketing, social media and PR strategies
Source: Close Brothers Asset Management/Family Business United
Penny Lovell, Head of Private Client Services at Close Brothers Asset Management said: “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. Taking advice early and developing a personal financial plan is crucial to alleviating anxiety and meeting long-term goals.”
Maintaining the family values of the business and developing responsible future owners are equally a cause for concern, with 34% citing both as an issue.
It's not all bad news
Despite family business owners having these concerns, they do not seem to be having much of a negative effect on the sector as a whole.
New research by Oxford Economics for the Institute for Family Business (IFB) Research Foundation has not only found that just under half (49%) of family run SMEs are planning to expand in the next 12 months, but they also make a substantial contribution to the UK economy.
Since 2013, family businesses have increased employment by 6%, paid £125 billion in taxes and contributed to over a quarter (26%) of the UK's entire GDP. There has also been a strong 2% rise in turnover as it now reaches £1.3 trillion.
Almost half (43%) of family business leaders said they plan to invest in training schemes aimed at advancing the skill set of their workforce in order to support growth.
Peter Armitage, Chairman of the IFB, believes these new figures highlights "how vital family-run firms are to the UK" and said that they serve as "the backbone of the economy".