FAMILY PLANNING
Do you have succession plans in place?
by Service Dealer Editor, Steve Gibbs
 
Steve Gibbs

A significant number of you reading this today will be involved in a family business in some way.

 

I read some very interesting statistics that were published recently regarding just what an important contributor to the national economy family businesses truly are.

 

In a new research paper entitled the UK Family Business Sector Report, produced by Oxford Economics for the Institute for Family Business (IFB) Research Foundation, it is revealed that family businesses’ gross value added contribution to UK GDP has increased by £100 billion since 2010 to now total £519 billion. This means that family firms, remarkably, now generate a quarter of UK GDP.

 

A quote I read from Elizabeth Bagger, who is the IFB Executive Director, said, “Family businesses are the backbone of the UK economy - but their widespread presence and contribution to the economy are often underestimated. You will find family businesses all across the UK, in every industry sector - from sibling start-ups to multi-generational international brands.

 

"Not only have family firms created an extra 2.3 million jobs since 2010, but their tax contribution each year is more than the annual NHS budget. This all demonstrates how growth in the family business sector benefits the UK economy, consumers, the exchequer and the millions who work in family businesses.

 

"To ensure family businesses continue to flourish, we’re calling on the Government to support them with policies which allow family firms to plan and invest for the future.”

 

Which is a sentiment which I'm sure many of our readers would echo - because it's this notion of planning and investing in the future which can often prove highly problematic for family businesses in our sector.


Of course there are many advantages in running a family business. Maybe one of the most important being the overall stability of the company which comes from having the longevity of family leadership. Also the commitment to the company's cause will be incredibly strong amongst family members - arguably more so than in non-family companies.


Other factors such as flexibility with family members wiling to wear whichever hat is required to get the job the done and potentially lower costs with family members prepared to take pay cuts when times are tight, can also contribute to their continued success.


But it is undeniable that there are some ever-present risks which are peculiar to family businesses. One unfortunate one is simply a lack of interest amongst some family members in being part of the company. If a situation occurs where family members aren’t truly interested in joining the family business, but do so anyway because it’s expected of them, the result is likely to be apathetic, unengaged employees. In non-family businesses these types of employees would simply be fired. It’s not so simple in a family firm though!


Following on from this, other potential hazards could include family conflict, unstructured leadership or nepotism putting the wrong people into the wrong roles!


But perhaps the biggest risk to family businesses and one which we hear about all too often amongst independent dealers, is a lack of succession.


It appears that many family firms lack succession plans, either because the leader doesn’t have the desire to admit that he or she will, one day, need to step down, or because there is unfortunately no immediately obvious candidate within the family set-up willing to take the business on into the future.


Business experts will talk about just how vital succession planning is for family businesses. Not having a strong succession plan in place, they say, could result in poor leadership, family quarrels and often financial or legal trouble for the company.


It's certainly a complicated and difficult area - and one which proves painful for many companies. It is in fact a topic which is due to be discussed at November's Service Dealer Conference.


In the meantime let us know, if you are you part of a family business, what are the main advantages and disadvantages you find this affords you in running your dealership? Also is succession a worry for you? Or something which will just happen smoothly and naturally?


We'd love to hear your thoughts on the matter. Please leave a comment below and we may look to publish some of your contributions in the next issue of Service Dealer magazine.

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