Month: July 2023

Neil Davy, Chief Executive of Family Business UK

Over the past few years, we’ve seen extraordinary political change. In my brief time as Chief Executive of the Institute for Family Business, the UK has witnessed four Chancellors, three Prime Ministers, and two Monarchs.

This unprecedented amount of disruption and uncertainty has continued across the business sector thanks to geopolitical instability, a cost-of-living crisis affecting all parts of our economy, as well interest rates and inflation levels not seen for years.

Most recently, low levels of trust in our big institutions, including business bodies, have been rocked even further and left businesses of all sizes wondering where to look for some certainty, a voice, and a hopeful vision for the future.

Even with the Prime Minister’s five pledges set out earlier this year – which include halving inflation–Britain risks merely moving from a position of atrophying to stagnation, or at best low growth.

A strategy for growth

The UK needs to formulate a growth strategy that encourages and incentivises businesses to focus on longer-term investment opportunities and returns for stakeholders, the environment, and the UK’s role and place in the wider world.

Similarly, if the events of the past few months have taught us anything, it’s that the business community and the groups that represent British industry need to work much harder for the businesses they represent if they, and the UK, is to have a prosperous future.

We need to champion the interests of business, but also provide support in helping them grow, and highlight their role and contribution economically, as well as in every aspect of society.  This starts by properly acknowledging, representing and listening to the views of family businesses which operate in every sector and community in the UK.

The opportunity

That’s why, today, we are proud to unveil Family Business UK: a new movement of family businesses advocating for the family business model as a leading example of sustainable and responsible business that should have a stronger role in shaping Government policy and within the UK economy.

For too long, political, industry and business decision-making has taken a restricted approach to investment decisions that responds to the priorities of non-family business PLCs, whose priority is to meet the demands of anonymous shareholders looking for short-term returns on investments.

​There is now an opportunity – and a need – for the voice and model of family business to take centre stage.  Family businesses offer a model that others can learn from, work with, work for, or even adopt.

Family businesses represent the bedrock of our communities, the backbone of our economy and are people-centric organisations.

Our latest research, in conjunction with Censuswide, reveals the majority of the British public would prefer to work for a family business over other business models such as Private Equity, PLCs, and Venture Capital Firms.

Those polled also said they would rather buy from a family business than from any other type of business. They are so much more than short-term wealth creators, but forward-thinking innovators, skill providers, community builders and multigenerational institutions embedded into the history and fabric of British society.

In 2020, family businesses across the whole of the UK generated £575 billion in gross value added (GVA) contribution to GDP (gross domestic product) and employed 13.9 million people.

A positive step forward

It’s time to show the positive impact family businesses have on our society, the economy, and the environment. And it’s time for Government to advocate and support the sector if we want to address and solve the biggest challenges in society and create a more prosperous future for all.

Family Business UK is a growing movement that will champion the model of the family business. They present a leading model of sustainable and responsible businesses that puts the interests of all stakeholders, not only shareholders, first.  I don’t believe they have been properly acknowledged, represented or championed.

Our aim is to support family businesses and the sector to grow and prosper for generations to come; advocate for policies and regulation that incentivise long-term investment and ensure the financial sustainability of the sector; and shift perceptions towards family businesses, and the contribution they make to society.

Family businesses are vital to the long-term strength and prosperity of the UK, and our economy and our communities. For too long their value and contribution has been under-represented and overshadowed. It’s time for that imbalance to be addressed.

 

• Family Business UK is a growing movement of family firms seeking to advocate for a stronger role and voice of family businesses whilst providing support to the sector at all levels.
• The organisation will promote the role of the family business model as a leading example of sustainable and responsible business, working to shift the perceptions and better significant role they play in our economy and communities up and down the country.
• Launch comes as exclusive polling from Family Business UK and Censuswide found that almost half of British consumers would prefer to buy from a family business.
• Study also reveals a quarter of the British Public feel the UK Government should do more to promote the family business model within policymaking. Nearly a third (28%) said more support should be given to family businesses.

 

Monday 3 July: After two decades operating as the ‘Institute for Family Business’, today the organisation is delighted to announce it will be relaunching as Family Business UK.

Family Business UK’s new purpose will focus on creating a movement of family businesses that promote the role of the family business model as a leading example of sustainable and responsible business.

The organisation will work to improve the perceptions of family businesses, and better highlight the contribution and significant role they play in our economy and communities up and down the country.

Family Business UK will also support and advise family businesses to invest, grow and sustain for the long-term, helping family businesses of all sizes deal with common challenges across various stages of the business lifecycle.

Sir James Wates CBE, Chairman of Family Business UK, said:

“Our objective is to lead a movement of family businesses working to create a more prosperous and sustainable future for generations to come, positioning family businesses in the UK as an economic force that demands the respect of government and policy makers. We invite all family businesses to join us.”

Kevin Hollinrake MP, Minister for Enterprise, Markets and Small Business said:

“Family businesses play a vital role in the UK economy and are valuable and trusted components of our communities. As a sector that delivers jobs and training to local regions, they employ 13.9 million people across the UK and represent the best of British business.

“I look forward to continued engagement with Family Business UK to ensure that family-owned firms are championed, and can operate in an environment where all enterprises can flourish and grow.”

 Chief Executive Neil Davy said:

“Responsible businesses, like family businesses, need a vocal champion that showcases their strengths, supports them with their challenges and celebrates the role they play in society. As Family Business UK, we are committed to ensure their work and contribution is recognised and supported.”

The announcement comes as exclusive research commissioned by the Family Business UK and produced by Censuswide* reveals that 35% of the British Public would prefer to work for a family business over other business models such as Private Equity (11.4%), PLCs (13%) and Venture Capital Firms (8%). Those polled also said they would rather buy from a family business (44%) than from any other type of business.

Regional Breakdown

The regions where consumers said they would want to buy from a family business

Region	Preferability
Scotland	51%
South West	48%
South East	47%
Yorkshire and Humber	46%
North East	44.1%
West Midlands	44%
North West	42%
East Midlands	42%
East of England	40%
Wales	39%
London	38%

 

Chief Executive Neil Davy said the re-branding to Family Business UK will better reflect the organisation’s focus and goals whilst championing the interests of its members, provide additional support and highlight the wider role of family firms in society.

Family Business UK believes that for too long, political, industry and business decision-making has taken a restricted approach to investment decisions that responds to the priorities of non-family business PLCs, whose priority is to meet shareholder demands for short-term returns on investments.

Family businesses offer a model of business that put people at the centre of decision making, see values as an asset, have greater freedom to experiment and innovate and, ultimately, takes a long-term view, putting the interests of the next generation at the heart of businesses.

The UK needs to formulate a growth strategy that encourages and incentivises businesses to focus on longer-term investment opportunities and returns for stakeholders, the environment, and the UK’s role and place in the wider world.

This starts by properly acknowledging, representing and listening to the views of family businesses which operate in every sector and community in the UK.

Censuswide research also reveals that the British Public believe family businesses have the best business model for putting people at the heart of business (24%) when compared to other models.

Family Businesses also take the most local approach and are seen as the leading model for companies prioritising investment in their local communities, according to the study.

Overall, a quarter of the public felt that the UK Government should do more to raise awareness and promote the family business model within policymaking, with nearly a third (28%) of those polled saying more support should be given to family businesses. This included cutting Business Rates (27%), introducing new policies that help owners pass their business to the next generation, and also appointing a Family Business Minister in Government.

In 2020, family businesses across the whole of the UK generated £575 billion in gross value added (GVA) contribution to GDP (gross domestic product), and employed 13.9 million people.

This means that family firms comprised 85.9% of all UK firms, directly generated 44.4% of GDP, and were responsible for 51% of all private sector employment in the UK economy in 2020.

 

Sir James Wates, Chair of Family Business UK

The events of the past few months have shown clearly that groups representing British industry cannot take their influence and status at the top table for granted. Although the narrative surrounding the CBI’s struggles has focused on safeguarding of staff, I would argue that the cautionary tale is more about failure to deliver on organisational purpose.

Of course, the CBI is right to be addressing the past cases of misconduct, and judging from the membership support for its new plan, there is sufficient confidence in its ability to fix its people culture issues. This is a good start in its road to recovery.

However, even more fundamentally, the CBI is in danger of failing to deliver on its purpose. If the organisation doesn’t carry out its reforms successfully to deliver on its core mandate, others such as the Business Council proposed by the British Chambers of Commerce will look to plug the gap as the representative voice of business.

“Purpose and Leadership” features as the first of six principles in the Wates Corporate Governance Principles for Large Private Businesses, developed in 2018 as a tool for companies to use in guiding and reporting on how they are governed. It’s absolutely vital that companies are clear about the purpose of their existence, how their strategy serves to accomplish it, and how organisational culture supports it all.

The principle applies to trade bodies, as well as to individual companies. In my mind, the CBI’s purpose is to be a conduit of information between government and business – effectively representing the interests of the broader business community to government at the most senior levels. This must guide its strategy, and be the ultimate criteria on which the CBI’s success is measured.

While other trade associations will continue to represent their specific interests, sectors and models, the CBI must again find a constructive way to represent the macro – bringing together this plurality of voices in a coherent and effective manner.

In a broader sense, the business community needs to do better at communicating the value that the private sector generates for society, and the CBI needs to be leading this call. Generating wealth is not just for shareholders; the private sector generates taxes (either directly or indirectly) that account for three-quarters of HM Treasury’s revenue.

The fundamental role of business in society is something we’ve been reflecting on deeply at the organisation I chair, the recently re-branded Family Business UK. As Family Business UK Chief Executive Neil Davy told the Times, business groups need to make themselves relevant to the needs of everyday people, and properly articulate and prove why it is they deserve to have their voice heard in the wider conversation about how society is governed and structured.

From my many years working in the family business sector, I’ve seen first-hand the exemplary ways in which family firms have built long-lasting ties between business and community. Creating jobs for the long term; supporting local people through difficult times; and taking the necessary steps to make their businesses more sustainable and play an active role in creating a Net Zero economy. These are the basics on which long term trust and purpose are built.

The ethics and values of each family are baked into their business – in how they govern themselves, how they communicate with staff and other stakeholders, and how they invest for the future to create wealth benefiting all of society.

Family businesses are the bedrock of the UK economy – representing five million businesses, supporting around 14 million jobs, generating more than a quarter of GDP, and contributing almost £200 billion in tax.

Recent polling commissioned by Family Business UK found that the British public find family-run businesses to be the most trustworthy companies (25.4%) when compared to PLCs (14.7%), venture capital firms (7.6%), and private equity backed-companies (9.8%).

In addition, the polling showed that the public believes family businesses look after their employees equally as well as employee-owned organisations.

Family businesses want to continue to thrive and deliver on what the public trusts them to do – to treat stakeholders fairly and to generate value for society. Our objective at Family Business UK is to lead a movement of family businesses working to create a more prosperous and sustainable future for generations to come, positioning family businesses in the UK as an economic force that demands the respect of government and policy makers. We invite all family businesses to join us.