New Research Unveiled on Family Business Entrepreneurship
28th April 2016
Research by the IFB Research Foundation provides new insights and recommendations on UK family firms’ entrepreneurial orientation, innovation and performance.
The first report of its kind gathered evidence from more than 300 family businesses across 17 industrial sectors, taking an in depth look at how the sector uses entrepreneurship and innovation to nurture their competitive advantage and overcome economic and financial downturns.
Involve the next generation, giving them space and encouragement to foster entrepreneurship
“The next generation may have identified potentially profitable opportunities from their experiences working inside or outside the family firm […] pursuing these activities can be an invaluable training ground for when their turn comes to take over the reins”.
Despite wanting to keep family members at the forefront of the senior leadership team, a significant number of family firms are failing to involve the next generation in strategic decision-making areas, such as innovation and entrepreneurship. This could lead to a less seamless and disjointed transition when the time to handover the firm arrives. By starting the conversation around succession planning early and getting both the current and next generations involved in discussions about the future, firms have a greater chance of long-term success.
Family and non-family involvement
“Outsiders can have quite different mindsets and can bring in new ideas, skills and capabilities required to increase entrepreneurship”.
Introducing non-family board members and involving non-family employees in innovation decisions can lead to greater entrepreneurial success.
Appointing non-family board members can be particularly beneficial when the firm is growing, as they bring in new ideas and networks of contacts.
“Non-family employees often have deep insights into the business and emerging market developments, which can be harnessed to foster entrepreneurial activities”. Family-run firms should consider recruiting, developing and incentivising non-family employees to be more innovative and entrepreneurial.
“Put entrepreneurship and innovation front and centre”.
Diversification, both in relation to the board of directors and firm offering, is a key way for businesses to enhance their entrepreneurialism. Among the firms surveyed, new products or services accounted for one in 10 of all sales. This shows that creative thinking can have a positive impact on the bottom line.
Speaking about the new findings IFB Communications Director Fiona Graham said: “With more than 4.6 million family-run enterprises in the UK today – many of which are in their third, fourth and even fifth generations – it’s no secret that family firms have a proven track record when it comes to heritage and core family values.
“However, as with any business, innovation and evolution is key when it comes to safe-guarding for the future and ensuring a successful, long-term strategy is in place to support growth. This report illustrates how organisations can employ a range of techniques and strategies to expand on the entrepreneurial acumen that already exists within their business, and harness it to improve their success rate and profitability.”
If you’d like to know more about entrepreneurship in UK family business and gather useful insights into strategies that foster entrepreneurship in your family firm, you can access the full report here.