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Family businesses leading the way

As a principal sponsor of the IFB (now rebranded Family Business UK) National Family Business Conference 2023, we were delighted to see so many family businesses gather in Glasgow in June.

It emphasised the incredible role family businesses play in the UK economy – leading the way on innovation, creating employment, and importantly, in driving UK-wide growth and prosperity.

In the UK, 90% of all private firms are family businesses. That’s 4.8 million businesses. They employ 13.9 million people, generate £1.7 trillion in turnover, and contribute £575 million gross value added (GVA) to UK GDP (Source: IFB Research Foundation, The State of the Nation – The UK Family Business Sector 2021-22).

The three-day event in Glasgow saw family firms of all sizes and sectors meet to discuss how family businesses can continue to innovate and invest to support the next generation of businesses and their leaders.

There were many interesting panel discussions and immersive workshops. Here are some of our key takeaways on how family businesses can continue to lead the way:

Transformative change. It seems like big challenges are on every horizon. Economically, businesses are facing huge disruption with the weight of inflation and rising interest rates and an increasing focus on cost reduction and cash control (Source: Deloitte CFO Survey: 2023 Q2). Climate change is wreaking havoc on livelihoods, food supply, water resources and tragically human survival itself. Technology and governance are coming head to head in the field of AI and the question of inter-generational equity is vexing many. Referring to what might be termed a “polycrisis”, Forum for the Future’s Dr Sally Uren OBE introduced us to “Earth Overshoot Day” - the day by which the planet uses the resources it generates in any given year (set as 2 August for 2023. Source: Earth Overshoot Day). She stressed the need for “just and regenerative business” and the importance of family businesses as stewards of the next generation. Without the same market pressures of listed companies, family businesses can take a long-term approach to investing and are in a prime position to adapt strategies to unlock the potential for transformative and just change.

Embrace disruption. The same theme of the ability of family businesses to take a long view also played out in a session on embracing disruption to build better futures. Family business leaders need to take big steps, and welcome disruption, to build the future they want rather than waiting to see how things develop. Scott Campbell, partner at Deloitte, sat on a panel which explored disrupting the norm. He described a mindset shift from seeing technology, as a way to increase efficiency and make more money through to experimentation and discovery, to find ways of reconfiguring systems to achieve not just efficiencies but wider societal and environmental benefits.

Legacy. Described as “how future generations will remember us”, legacy requires family businesses to adapt and innovate to remain relevant and successful. We heard from several businesses about the lessons they have of learnt from their own journeys, including David Thomson from DC Thompson and Dr Jason Wouhra from Lioncraft Wholesale. Key takeaways here were the need for openness among shareholders and how success is not defined as wealth, (this is simply a by-product of hard work) but as the ability to retain passion and energy. Recognising and developing talent is an essential component of legacy as well as meaningful community impact. Those leading family businesses should always ask themselves, “who am I developing?” and “how can I be a good ancestor?”

Succession. For a family business to continue to flourish, future family ownership should not necessarily be presumed. Making sure succession is on the agenda and having a plan is crucial. We heard examples of non-family members joining boards and the business continuing with a new family on board as described so captivatingly by Joyce Onwonga. We also heard from Hugh Clark about Clarks’ transition to private equity control and from Ewan Hall about the evolution of the Baxi boiler business to employee control. It is abundantly clear that succession takes may guises in the context of a family business.

A team from Deloitte also hosted one of the workshops on Sustainability. Overthe next decade, the relationship between business and the natural world will be a defining one. Regardless of industry or geography, organisations face dynamic, connected challenges: from environmental degradation and human rights challenges, to shifting geopolitical power and a focus on inclusive growth. Where do you start? And more importantly, how do you keep going? In this workshop, led by John Gillam and Elena Oyon from Deloitte, the focus was on these key steps on the sustainable transformation journey:

  1. Gap analysis. Conduct analysis on the current business to understand how you can meet your corporate objectives and compliance needs.
  2. Transition Plans. Set ambition, roadmaps and execute your sustainable transformation. This will draw upon areas such as supply chain decarbonisation, circular product pathways and biodiversity.
  3. Reporting and Disclosure Strategy – create a framework to provide reliable and auditable data that meets your corporate and regulatory needs.

Next year’s Family Business UK Conference will take place in the first week of June 2024 in London. We hope to see you there!