About Family Business
In this section:
WHAT IS A FAMILY BUSINESS?
A firm is considered a family enterprise, if:
- The majority of votes are owned by the person or persons who established the firm, or those who have acquired the share capital of the firm or who are in the possession of their spouses, parents, child or child's direct heirs.
- The majority of votes may be indirect or direct.
- At least one representative of the family or kin is involved in the management or administration of the firm.
- Listed companies meet the definition of a family enterprise if the person who established or acquired the firm (share capital) or their families or descendants possess 25% of the right to vote as mandated by their share capital.
The backbone of the economy, the bedrock of communities
The UK’s family businesses come in all sizes, sectors, and from all regions. Many of these businesses have been operating for hundreds of years, and their longevity and enduring success are testament to their innovative and long term outlook.
There are over 5 million family businesses in the UK, generating over almost a third of UK GDP. In 2018, the family business sector paid £196 billion in tax, over a quarter of the Government's total revenue.
Family firms employ 14 million people in the UK – 50% of private sector employment.
Building on success for generations to come
Family firms survive over generations by taking a long term and sustainable outlook, whilst adapting to stay relevant to the modern world.
Strong values run through family businesses. Owners have the opportunity to teach and pass along their business and personal values to the next generation of family managers/owners.Family members take pride in upholding these family values and build them into their day-to-day work and personal activities.
Family businesses embody and embrace responsible capitalism. They avoid excessive debt, have lower staff turnover and take a long-term and sustainable approach to investment. When tough times arrive, family firms are less likely to go under and are better placed to lead the recovery.
Families in business have an opportunity to create a lasting legacy that brings with it a sense of accomplishment, allowing subsequent generations to become stewards of the family business and carry it to new heights in the name of the family. As part of this legacy, they are committed to training the workforce of the future
Family firms are committed to the local communities in which they operate, and take an active role in local projects. Many family business people also undertake significant philanthropic activities.
Family and non-family staff report a greater sense of loyalty to family businesses. They also tend to be more committed to the success of the business and are more passionate about what the business stands for.
Family businesses are less driven by short-term financial results and are prepared to sacrifice short-term gains for the achievement of longer-term goals. This long-term approach to investing is often referred to as “patient capital.”
Family business is a great British success story.