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Uk family businesses must toughen up according to PwC Newcastle report

A recent survey from PwC in Newcastle has found only 13% of UK family businesses have a succession plan in place, despite 43% wanting to pass the business on to the next generation.

The report, The Family Factor: Professionalising the UK Family Firm, also found that 22% (a reported significantly lower proportion than the global average) say they want to pass on ownership, but also bring in professional management.

In addition, the report highlights that UK family firms need to upgrade the processes, governance and skills within their business, and their own families, to stay ahead of hungry new competitors and remain relevant in a rapidly changing business environment.

The report shows that UK family businesses firmly identify recruiting the right people as the key challenge over the next 12 months.

However, bringing in top talent is a challenge for them, as candidates may not see a sustainable career progression within a family business.

Equally, there is little point in hiring the right people unless you have the processes and systems that enable them to do their jobs.

PwC’s North East family and private business leader, Lee Stamp, said: “Family businesses are the backbone of the North East economy with many having a heritage that goes back generations.

“Yet the report highlights that while many across the UK seem to be reasonably well placed in terms of procedures to tackle family conflict, only 13% have a robust and documented succession plan in place.

“The report also shows there is a worrying trend that as family businesses age, growth and innovation become a lower priority.

“Often because of the family structure, family businesses can find it difficult to face up to make hard commercial choices and decisions.

“Making a capital commitment to foreign expansion or selling parts of the original business are emotional and divisive issues. They often get postponed.

“Many businesses today need to survive on thinner margins, identify and address potential threats early, and innovate and adapt faster.

“It’s tough for any business, but can be an even greater challenge for some families.”

“After weathering the economic storms of the last few years, family businesses are coming out of survival mode and are beginning to look at what they need to change in what’s undoubtedly a harsher business environment.”

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