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Family owned firms are a â??neglected part of economy'

Family owned businesses have been largely neglected by UK policy despite their contribution to the country’s economy, according to research conducted by Credit Suisse.

The research showed that family-owned firms comprise only 8% of British businesses. In contrast, Germany and France have a much higher proportion of family run companies, with 36% and 30% respectively.

The report’s authors say an increasingly diverse ethnic mix is playing a role in the growth of family-owned companies as 66% of ethnic minority businesses are family owned.

However, family-run businesses are failing when it comes to retirement for the founders. In the UK, 42% of these entrepreneurs say they have no succession planned for when they retire. For those who have, only 27% plan on keeping the business in the family. Only 16% of such enterprises have been family run for three or more generations.

Despite this, the report suggests that family firms are lagging behind in business survivorship rates because they are more likely to take a long-term and less aggressive view of business development.

Michael O’Sullivan, head of UK research for Credit Suisse’s private banking businesses, said: “Ultimately, one of the reasons for the relative stability of larger economies in continental Europe is the significant presence of family businesses which, at least on a stylised basis, tend to be less leveraged and generally have a longer-term focus on investment and innovation.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .