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Bringing the family business community together

Dispelling The Myths Of Family Firms

24th July 2014 Paul Andrews

Things are changing for the better but there are still assumptions and generalisations made about family firms, despite the significant contribution they make to the UK economy. 

Paul Andrews looks at some of the myths that undermine the family business sector, challenging the myths, and uncovering the real truth behind this dynamic, engaging and profitable sector.

MYTH 1 - Family Businesses are Small Businesses

FACT - There are many small family businesses across the UK and their contribution to the UK economy is immense. However, not all family businesses are small businesses and in recent years there has been growing recognition of the sector and the benefits they bring to Britain. 

Take the likes of Wates, one of the largest UK building and construction companies, not to mention David Nieper, Weston’s Cider, Baxters, Walkers Shortbread, Shepherd Neame and Samworth Brothers, all of whom are large businesses and clearly disprove the size assumption.

MYTH 2 - Family Businesses are not Household Names

FACT - To the contrary, family firms are household names, although many will not have been appreciated for their family heritage and connections. Take the likes of SC Johnson, Ford, Walmart, Samsung and IKEA. 

In the UK there are some great family firms such as The Goring Hotel, Macsween of Edinburgh, Kinloch Anderson, Clarks, William Jackson Food Group, Taylors of Harrogate, Fortnum & Mason, The Morgan Motor Company, William Grant and Drayton Manor Theme Park. 

In many cases, it is not until their names are listed that people realise they are actually family businesses.

MYTH 3 - Family Businesses are not survivors

FACT - Whilst statistics may show that only a small proportion of family firms successfully pass to the third generation, there are great examples of family firms that date back as far as 1420. These firms represent great British family business successes and should not be forgotten. 

Whitechapel Bell Foundry is the oldest family firm in the UK dating back to 1420 but others help to dispel the myth including RJ Balson, the oldest butcher (1515), R Durtnell & Sons Limited, the oldest builders (1591) and James Lock & Co, the oldest hat maker (1676). Others include C Hoare & Co, the oldest bankers (1672) and CPJ Field and Co, the oldest funeral directors (1690).

Clearly, these family firms are survivors!

MYTH 4 - Family Firms are not Significant Employers

FACT - Clearly this is not the case when the likes of The Swire Group, JCB, NG Bailey, Warburtons, Wates and Shepherd Neame are taken into account. Individually these family firms are significant local, regional and national employers and collectively family firms in the UK make up a significant workforce.

Family firms exist the length and breadth of the UK as the following shows, with the most in the South East but it is in Northern Ireland and the East Midlands where the concentration in terms of private sector firms is highest overall:

1. South East - 498,874 family businesses (68.10%)

2. London - 465,665 family businesses (65.90%)

3. North West - 301,603 family businesses (69.50%)

4. East of England - 297,965 family businesses (62.90%)

5. South West - 249,804 family businesses (59.30%)

6. East Midlands - 237,608 family businesses (77.70%)

7. Yorkshire & Humber - 213,251 family businesses (63.50%)

8. West Midlands - 204,098 family businesses (58.00%)

9. Scotland - 178,573 family businesses (62.00%)

10. Wales - 131,188 family businesses (68.40%)

11. Northern Ireland - 94,146 family businesses (77.80%)

12. North East - 86,573 family businesses (70.90%)

Source - BIS/Oxford Economics, Regional Distribution of Family Businesses, 2010. Percentages reflect the proportion of private sector firms that are family businesses

Family Businesses are the backbone of the UK economy and the bedrock of our communities.

  • There are three million family firms in Britain*
  • Family businesses employ over 9 million people*
  • Family firms contribute almost a quarter of total UK GDP*
  • Family businesses provide over £81 billion in tax to the UK  Exchequer annually*
  • 50% of the Scottish private sector workforce is employed in family firms**
  • 73% of Scottish businesses describe themselves as family businesses**

* Source: The Institute for Family Business 
** Source: The Scottish Family Business Association

In reality, many families control and manage significant entrepreneurial businesses within the UK, and already have plans and governance structures in place to continue to be successful for many generations to come. There are hundreds of family firms that dispel the myths that they will not and cannot span the generations successfully and these family firms will continue to contribute not just to the UK economy but to contribute and compete at a global level.

Whilst it is true that not all family businesses are global organisations, many lead their sectors and continue to pioneer new frameworks to help them continue successfully and the sector deserves respect and recognition for all that it has achieved and continues to achieve day-in, day-out. Family firms really are the backbone of the UK economy.




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