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Topics: Business, Private sector, Economics Pages: 23 (3128 words) Published: January 12, 2014
The UK Family Business Sector
An Institute for Family Business report
by Capital Economics

February 2008

Foreword
February 2008

Our aim in commissioning this report is to highlight the size, scope and breadth of the UK family business sector.
This report, which was produced by Capital Economics, will encourage debate on a part of the UK economy that is not always well understood. The report aims to spotlight issues that family firms face, as well as strategies that policy makers should consider in order to underpin the ongoing development and growth of the sector. The UK economy draws strength from the breadth and diversity of entrepreneurial activity nationally; as the report confirms, family firms are a key component of the private sector, helping drive the creation of wealth and deliver benefits for society through employment and the support that family firms provide to our local communities.

The content of the report draws on the body of research on family firms that the IFB has identified from both private and government sources. We trust that the report will provide policy makers and other stakeholders with valuable insights into the sector.

Grant Gordon
Director General

About IFB
The Institute for Family Business was established in 2001 as an independent, not-for-profit organisation supporting a dynamic family-owned business sector in the UK through advocacy, education and research. IFB Advocacy promotes greater awareness of the sector and highlights policy areas that are of special importance in underpinning the growth and entrepreneurial development of family firms. IFB Education, which includes our national conference, seminars and educational events, offers programmes that seek to increase understanding with respect to the unique challenges and opportunities that family firms face. The association is the UK chapter of FBN International.

www.ifb.org.uk

The UK Family Business Sector
Contents
Executive Summary

2

1. What is a family business?

3

2. Characteristics of the family business sector

4

2.1 Ownership typology

4

2.2 Sectoral concentration

4

2.3 Generational transfer

5

3. The size of the family business sector

5

3.1 The number of family firms

5

3.2 The turnover, employment & contribution to GDP of family firms

7

3.3 Family firms by legal status

9

3.4 Change in the size of the sector

11

3.5 International comparisons

12

4. The wider contribution of the family business sector to the economy

13

4.1 A breeding ground for start-ups

13

4.2 Contribution to tax revenues

14

4.3 The relative performance of family firms

16

5. The business & tax environment for family business

19

6. Conclusion

22

Acknowledgements
We are very grateful to Dr Panikkos Poutziouris (Visiting Fellow, Family Business Initiatives, Manchester Business School), Susan Symons and Paul George (partners at PricewaterhouseCoopers), Francis Chittenden and Brian Sloan (of Manchester Business School), Professor Stanley Siebert (of Birmingham University Business School), Rupert Pearce Gould (of Cambridge Corporate Consultants Ltd) and Paulo Volpin, Hannes Wagner and Julian Franks (of London Business School) for the provision of data and helpful comments.

Institute for Family Business

1

Executive Summary


We estimate that family firms account for 65% or 3 million of the total 4.6 million private sector enterprises in the UK economy.



The vast majority of family enterprises are small and medium enterprises (SMEs). 56% are sole traders with no employees.



But we also estimate there to be over 1,000 family firms with more than 250 employees. These alone account for 20% of the turnover of the overall family business sector.



Because family enterprises are more likely to be small firms, they account for a lower share of turnover, employment and GDP than of the total number of firms in the...
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