There is a changing face of the family unit working together in family firms with 25% having so-called ‘blended families’ and an increase in the generations working together.
The survey, conducted by Families in Business (FiB), the independent organisation dedicated to supporting family firms, identified how the changing face of the modern family is evidenced within a growing proportion of family businesses as a result of divorces and second marriages that, in turn, has led to a growing number of step and adopted children joining a family business.
Additionally, the research findings confirmed the multi-generational structure of the vast majority of family firms – with 12% having directors over 81 years old who are still involved in the business, and 33% with directors aged over 71 years old. The majority of family firms (45%) have two generations working in the business, with 18% having three and 2% with five generations still involved in the day-to-day running of the family firm.
Age and succession
The average age of a CEO of a family firm is 60, according to FiB’s survey, compared to 54 years old in all other businesses in the UK, whilst the average age for a founder to start their business is 40 years old. But males continue to dominate the boardroom influence and leadership of family businesses, with 82% having men in the most senior positions, and just 18% being females.
Alongside, uncovering if and how family firms are mirroring the changes in society and modern family life, FiB’s survey also challenged the ongoing governance matters ever-present in a family firm, with some startling results – only 4% of family firms have a robust succession plan in place, and less than a quarter (19%) have a shareholders agreement.
With statistics indicating that in nearly half of all family business collapses, the failure of the business is precipitated by the founder’s death, the survey also set-out to explore the level to which family business are ‘future-proofing’ themselves. The findings reveal only a small minority of family firms have actually planned for the unexpected or unimaginable, and yet almost half (48%) admit they would be vulnerable if something happened to key directors and family members, with the same number recognising that this is a real and potential threat for the business.
49% want growth for the family business with exit firmly in mind, 27% strive to ‘build something’ to be handed-on to the next generation, whilst 26% admit they most enjoy the lifestyle the family firm enables. However, advisers are 100% focused on succession, stating they believe this to be the main purpose for all family members working in the family firm and at best offering technical expertise rather than also considering the more emotional challenges associated with this.
FiB’s founder and CEO Dani Saveker said: “The family unit continues to change and now more than ever there is the potential for more generations of one family to be working within it, with the average being three or more generations.
“This year’s survey findings have once again proved fascinating. This is the third year we have conducted our survey across the UK that involved hundreds of family firms and professional advisers. The research also included a series of in-depth one to one interviews with family business leaders which revealed a rise in the number of same sex partnerships working alongside in the business, and highlighted the growing numbers of women working in a family business that are delaying having children until well into their thirties.
“This means children will not be mentored by parents in the family business as they once always were - ‘learning alongside’ them is less possible and if anything happens to their parents there’s an increased risk and gap of suitable next generation leaders ready to take the baton; a situation exacerbated by the low number of family businesses with a clear succession plan.
“Many of the findings are concerning, from this lack of succession planning, as well as the absence of any belief amongst family firms that succession and shareholder agreements are necessary, to growing reliance on substances such as alcohol - almost half of those taking part in the survey - or activities to help them cope with the day to day pressures."