Owners of family-run businesses are worried about their companies’ future according to new research by insurance provider Direct Line for Business.
Over a quarter (29%) of those running a family business told the insurer they are concerned that their company will die out when they retire, while a fifth (21%) forecast that it is unlikely any family businesses will exist in the future.
Owners of family-run firms said they didn’t believe younger generations necessarily have the desire to take on the running of family-led businesses. A third (33%) of such businesses believe other family members are not as interested in continuing the company as would have been the case in former generations.
Direct Line for Business suggested that one of the reasons for this could be that post-millennial Generation Z (that is, those born between the mid-1990s and now) are more interested in starting up their own enterprises. The company added that research shows that one-in-seven (15%) university undergraduates are planning to embrace entrepreneurialism and start their own company after graduation.
The findings also revealed that a third (33%) of family business owners admit that what keeps them up at night is the thought that younger generations would make changes to the business to which they themselves wouldn’t agree.
A third (33%) of family business owners also disagree with the inheritance tax rules that they believe unfairly penalises those seeking to pass on their business as a legacy to the next generation.
When it comes to naming a company, there are 18,341 family businesses registered with Companies House, of which the vast majority (over 18,000) are listed as ‘and son’. Less than 300 are described as ‘and daughter’.
The construction industry has the highest volume of businesses (25%) highlighting family roots by containing the nomenclature ‘and relative’ within a company name. Wholesale and retail trades come in second (15%) with agriculture, forestry, fishing and manufacturing each joint third.
Gaining experience in a family run business can be useful opportunity for succeeding generations, who can effectively begin training at a young age. But future proofing for the business owner can be difficult without a succession plan in place.