Exploring the foundations of successful family businesses.
We understand the unique challenges and opportunities that family businesses face, and are committed to supporting their entrepreneurial spirit across the UK through bespoke financial solutions that foster growth and sustainability.
Head of Corporate Banking, Scotland
A vital part of almost every high street and business park up and down the country, family businesses make a huge contribution to our economy and society through the income they generate and the jobs they create. Many have been at the heart of their communities for generations. In fact, the oldest family firm in the UK, RJ Balson and Son, a high street butcher in Bridport, Dorset, dates back to 1515 .
Family businesses have unique strengths, but also face a very specific set of challenges. Based on our conversations with family business owners at a series of events held across the UK in conjunction with Paul Andrews, Family Business United^, it’s clear that it can sometimes feel lonely. Fortunately, as a family business, you’re not alone: there are many others who have tackled similar challenges – as well as a variety of advisers with the necessary expertise to help guide you through the issues as you evolve and adapt to change.
From household name brands to small local enterprises and start-ups, family businesses are often the unsung heroes of the UK’s economy.
Founder of Family Business United
Running a family business can sometimes feel daunting, particularly when it comes to thinking about the transition of leadership, management and ownership when you’re ready to step down.
Succession planning can be complex and multi-layered, especially when family dynamics come into play. Irrespective of who is going to be involved in the business going forward – family members, external parties or a combination of the two – it’s vital that you start planning as early as possible.
Whether you’re a first-generation family business or you’ve already been through transitions of ownership over the years, considering some critical succession planning questions early in the process could help secure the best possible outcome. How and when do you plan to step back? How much involvement, if any, do you want to continue to have? What are the different ownership options available and what are the associated tax implications? What do you want to be remembered for? And do you know what other members of the family want?
Open, honest and ongoing conversations are key to ensuring you’re all on the same page. A robust succession plan should provide everyone involved with certainty and confidence in the transition.
Understanding what roles, if any, the next generation of family members want to play in the business is an important consideration for all family firms. Being clear about the subtle differences between leadership, management and ownership is key – and everyone needs to be sure that the decisions you make about the future are in the best interests of the business.
Are family members identified as future leaders of the business equipped with the necessary skills and experience? Do they share the business’s vision, and understand its purpose? The business world is becoming increasingly complex, requiring different skills and expertise – for example, the next generation will probably need to have a good understanding of the role of technology and artificial intelligence, among many other facets of running a business.
Provided the next generation has the necessary capabilities, mindset and desire to run the business, it shouldn’t matter where they gain their experience, whether within the business or another company, or even in a different industry.
Mixing family with business can sometimes get complicated. To reduce the chances of family disputes or misunderstanding, it’s vital that you clearly define roles and responsibilities from the outset. Pre-agreed boundaries separating family and business matters should help minimise the risk of conflict.
All of this needs to be supported by a clear governance framework that outlines how to:
Our conversations with many of our clients highlight the fact that effective, open and transparent communication between all family members is essential to the success of any family business.
Having an empowered board of directors, made up of an appropriate mix of family and non-family members, can help move your business in the right direction. For example, independent and objective input from non-executive directors can often prove to be invaluable, bringing new insights and opportunities to do things differently.
In addition, it’s imperative that family businesses and their boards be open to input and support from independent trusted advisers that have good relationships with all key family members, including the next generation. With the right experience and expertise, external advisers can act as a valuable sounding board, help your family identify potential problem areas early, and provide suggestions on how to tackle challenges.
You may also want to build relationships with others in the wider family business community. Peer groups can provide a useful forum through which you can share experiences with like-minded individuals. Similarly, it’s imperative to plan for how the next generation can be empowered to use their own knowledge, expertise and networks to help take the business forward.
Successful family businesses that stand the test of time tend to have clearly defined values and a purpose that’s well understood across the organisation and embedded in its culture. Of course, this shared identity and vision may need to evolve over time to stay relevant in an ever-changing world.
With a clear direction of travel, your business should be better able to navigate challenges and deliver the legacy you’re looking to create, while staying true to its values. Aligning everyone behind a clear purpose and values that are embedded across all areas of the business – and championed by strong and effective leadership – usually leads to better outcomes. Such businesses also tend to be better placed to have a positive impact on the communities they serve and to act as stewards for future generations.
Strategies for success
Start succession planning as soon as possible
Ensure the next generation is fully prepared for their role in driving the business forward
Make sure you have an effective governance framework in place with clear roles and responsibilities
Build a team with the necessary skills and experience, whether made up of family or non-family members and trusted advisers
Ensure your business values and purpose are clearly defined and embedded across the organisation.
How can we help?
Our dedicated and experienced teams can help you navigate the opportunities and challenges facing your family business. Here to provide support when you need it, we offer a variety of corporate financial services and solutions – such as corporate lending facilities that can be used to support a succession plan – and individual wealth plans to help you manage the three Ls (liquidity, lifestyle and legacy) to ensure the success of your family and its business interests for generations to come.
To discuss your business requirements and how Barclays can support you, contact us today.
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