Member Article

Yorkshire family businesses confident about the future say Garbutt & Elliott

Family businesses in Yorkshire are confident about the future, according to the results of a new survey released today by leading Yorkshire accountants Garbutt & Elliott LLP.

The survey, carried out in conjunction with Praxity, the largest global network of independent accountancy firms, revealed that the profitability of family businesses had increased during the past year with 55% of those questioned describing their financial position as “good” or “excellent”.

The survey also revealed that most family businesses expected the economic situation in the UK to improve over the next 12 months. Meanwhile 27 per cent of respondents revealed that the number of their employees had increased during the past 12 months.

David Dickson, Partner in charge of the Family Business team at Garbutt & Elliott, who have offices in York and Leeds, commented: “Our survey is extremely positive and encouraging. Family Businesses are the lifeblood of the Yorkshire and UK economy and, if they are confident about the future, then that really is very good news for us all.”

He explained: “Whilst there are clearly challenges ahead, family businesses across the county seem to be in very robust health. This survey provides yet more evidence that confidence is returning to the economy and that a well-run family business will be perfectly positioned to take advantage”.

Jeremy Oliver, a Partner who specialises in family business succession says: “Handing over a business from one generation to the next can be very difficult. It is therefore encouraging to see that of the family businesses questioned, some are now on the third, fourth or fifth generation. This trend will continue with over 50 per cent of respondents saying they would hand over their business to the next generation.

“Increasingly, family businesses realise the value of having an independent facilitiator to help them in the often complicated issues of family business decision making. Our experience shows that as the family business’s prosperity improves, potential conflicts between family and business can come to the fore, particularly in the area of rewards, family employment and dividend policy.

In this context, we believe that planning cannot start too early and that successful transition to the next generation requires the family to establish a vision which is shared with the key employees within the business. A successful vision can only be developed with the wider input of all current and future shareholders and this increasingly requires individuals who have experience in a number of family organisations.

Mr Dickson added: “The survey supports our view that, increasingly, family businesses are looking to handover that legacy to the next generation. There is an understanding that this will not happen automatically, but requires improved communication, forward planning and an acceptance by the family business that the next generation will require training, support and, often, expertise from outside the family to allow the business to develop and reward its stakeholders.

Mr Oliver concluded that: “Our survey indicates that there is a clear understanding that business disagreements can put a strain on family relationships and we observed that this is sometimes the reason why a family business does not move on to the next generation. Our work in this area indicates that the adoption of a prepared family constitution or family charter can significantly reduce the problems in clarifying appropriate processes which need to be adopted when conflicts arise”.

This was posted in Bdaily's Members' News section by Robert Beaumont .