The challenges facing family businesses
Armstrong Watson's Nick Palmer explains how missed opportunities are standing in the way of growth
As European politicians have recently experienced, there is a fine balance to strike in any large survey between “project fear” and uncovering what people actually want and know. A similar challenge has emerged in the analysis of our annual Family Business survey.
The questions in this year’s survey of approximately 500 respondents sought to understand what level of planning owners have put in place around current business issues. And, put simply, the results suggest a significant number of respondents do not seem to be taking advantage of every opportunity available to them.
One question looked at salary sacrifice. There are clear benefits to this scheme: tax relief is available and national insurance is only payable by employee and employer on a reduced amount of gross salary. Yet 21 per cent of respondents didn’t know what salary sacrifice was and 53 per cent were not considering the scheme at all.
On apprenticeships, only slightly more than one third of respondents are employing apprentices – and of those, only 44 per cent use the apprenticeship levy. 19 per cent of those employing apprentices don’t even know what the apprenticeship levy is. Again, these figures are puzzling given the financial incentives to assist with apprentice training costs.
When it comes to succession planning, 42 per cent of family business owners who intended to sell or pass the business to a family member had not yet discussed their plans and intentions with those in the next generation. 51 per cent of businesses do not consider themselves to be structured correctly – or do not know if they are – for a transfer or sale. Given the value and importance a company asset has for most family businesses, this appears to be a sizeable oversight.
That 80 per cent of respondents stated that they found it “very difficult” or “sometimes difficult” to recruit and retain new talent will come as no surprise. But when 35 per cent identified “having the right people in the business” as the main obstacle to business growth, it drives home the importance of thinking further ahead, setting a firmer vision for the business and having team accountability structures in place.
Business owners everywhere can also be comfortable in the knowledge that they are not alone when it comes to pressure to adapt and innovate. 89 per cent of respondents said they felt it – and it’s not clear what circumstances left the remaining 11 per cent immune from it.
In fact, the survey shows that very few businesses are unique in the challenges they face – and how they are reacting to changes to the business environment around them. And for the most part, it reinforces the impression that family businesses continue to achieve great things in spite of them.
But it also provides some food for thought and points of challenge, where businesses are missing the detail, the vision or recourse to a solid “plan B”.
To discuss any of the issues raised within the survey, please contact Armstrong Watson on 0808 144 5575
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