Some 63% of entrepreneurs plan to pass their business on to a family member, nearly half plan to give their business to their children, and one in ten plan to hand over to their spouse, according to new research from asset management company Close Brothers. The findings vary between different sectors and business types, with those in the transport industry most likely to hand over their children (75%), while wholesalers and distributors are unlikely to do so (43%).
With small to medium sized business often thought of as the building blocks of the UK economy, Close Brothers says ensuring the longevity of small businesses is vital. Indeed, according to Nigel Nicholson at London Business School, family-run firms are often the most successful companies worldwide, particularly those that retain their family identity. The ‘genetic’ bond between the leaders and the identity of the business is crucial, Nicholson says, and helps to bind customers and employees together with spirit and purpose.
The best family firms display confidence and commitment, pragmatism and ethics by mastering many challenges along the way to achieve true longevity. Some 10-15% of businesses make it beyond three generations, suggesting that not all of them act on the intentions to hand their businesses over to relatives.
Among the challenges involved in handing over from one generation to the next, Nicholson describes the inability of some leaders to ‘let go’, family loyalties getting in the way of identifying clear responsibilities and in some cases, families failing to accept that their youngsters’ ambitions may lie elsewhere.
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