30th October, 2015
In September and October 2015 PFA Research conducted research into family run businesses in Cornwall. We ran an online survey in collaboration with Business Cornwall magazine to gather insights into this key cross section of the business community; finding out about the unique challenges that family businesses face around succession, exit strategies and the pros and cons of working with family members.
The early data is interesting. The main reasons for starting or becoming involved with the family business are lifestyle choice (61%), it seeming a natural career choice (36%), wanting to continue the family tradition (18%) and it being an enjoyable option to work with family (18%). Two thirds of survey participants say that they have achieved that to a large extent, and a further 30% at least ‘to some extent’ – showing that family business owners are in control of their own destiny.
This is backed up by the main benefits of being part of a family business being trust in each other, working towards common goals/beliefs (both 79%), the view that family are more hard working/focused on the business (71%) and knowing each other’s strengths and weaknesses (69%).
Many business owners would sympathise with the main challenges faced by family business leaders – 85% find it difficult to switch off and 55% work too long hours. Family disagreements were surprisingly rare, with just over a third citing it as a main challenge. The other main issue is succession planning, for 36% of respondents.
Survival of the fittest
The family businesses in Cornwall who responded to our survey have been going for an average of 30 years! In context, the most recent figures from the Office for National Statistics show that the UK 5 year survival rate for businesses born in 2008 and still active in 2013 was just 41.3%. By region, the highest 5 year survival rate was in the South West, at 45.5%, while the lowest was in London at 37.1%. Nearly three quarters of our survey respondents think family run businesses are as likely as any other business set up to fail.
So what is it about family run businesses that means they can survive for so long? Is it because they are small, and because they focus on a central belief that is not tied solely to making a profit? 55% of survey respondents say it helps for customers/ suppliers to know that their business is family run and it’s a bonus to their marketing. Local factors such as the economy in Cornwall and owners’ lifestyle choice and desire to remain in our beautiful part of the world could be another key to their longevity.
Change of the guard
In the businesses that took our survey, 49% have two generations of the family currently involved in the business, 38% are limited to one generation and 13% have three generations involved. The common perceptions of a patriarchal leadership figure do not necessarily hold true; whilst the eldest generation is in charge of running the business on a day to day basis in a third of cases; another third are run by the youngest generation and a further 30% by the middle generation. 33% have a female leader and 26% are in joint control; with sole male control leading 41%.
During their average 30 year lifespan, control of the businesses surveyed has changed hands once on average, but most frequently, not at all. 51% expect the business to be handed on to the next generation or others within the family. The question is, is this linked to the challenges of succession planning and lack of time – are family business owners finding it difficult to find time to plan for the future?
For more Cornwall business research insights, please get in contact, we’re very happy to help.
Image: with thanks to We are Cornwall