Aberdein Considine: Most family firms would surrender control for growth
New research by Aberdein Considine has revealed that the vast majority of family firms in Scotland would give up control of the business if that was the only way for it to expand or grow.
Three quarters (75 per cent) of family-run firms in Scotland would consider ceding control of the business in order to attract investment for growth, compared to two thirds (66 per cent) in the rest of the UK.
The high number of those firms prepared to accept external control of their business could well indicate that access to more traditional forms of funding remains an issue for many firms when they are looking to grow.
Family businesses in Scotland account for around 50 per cent of all private sector employment and are responsible for roughly half the GDP created by private enterprise.
Succession remains one of the biggest areas of concern, but firms in Scotland expressed a degree of confidence in the continuation of a family connection with 87 per cent of owners indicating a preference to pass the businesses down to the next generation.
While just over one in ten (11 per cent) of Scottish family businesses owners said they wouldn’t allow external control under any circumstances, just over three quarters (77 per cent) said they would consider some form of inward investment.
Larger businesses in Scotland tend to be more likely to look at outside involvement with 93 per cent of firms with 250 or more employees open to some external investment compared with 43 per cent of those with fewer staff.
Only 5 per cent of those surveyed in Scotland said they wouldn’t be passing the business on to a family member. The main reason given was that the next generation wasn’t sufficiently qualified (43 per cent), with almost a third (29 per cent) saying their family had different aspirations and the same number saying they were simply not interested in carrying on the business.
The report also painted a picture of longevity and close family bonds in Scotland with 66 per cent of respondents saying they had worked in the family business for six to ten years, and 44 per cent of owners saying they had more than ten family members working for the firm. These numbers contrasted with the rest of the UK, where the figures were 29 per cent and 19 per cent respectively.
Ritchie Whyte, corporate partner at Aberdein Considine, said: “Family firms are critical to the success of the economy and it’s vital they have an environment which allows them to flourish.
“The fact that the majority would consider ceding some control in exchange for growth investment could well be a warning sign that accessing normal high street funding continues to be a challenge.
“Family owners bring a particular passion and skill set to running their own business and it’s critical they have the right support and advice they need to prosper, both when growing the business and when they are considering issues such as ownership, investment, strategy and succession planning.”