Three quarters of financial services firms are family businesses

A new report by the Institute for Family Business Research Foundation reveals the sizeable contribution family firms continue to make to the UK economy. In financial services the 65,000 family-owned businesses employ 272,000 people. They make up 75 per cent of private sector firms.

The report shows how the family business sector continues to grow, shining a light particularly on how small family firms are growing and investing for the future.

Speaking about the new report, Institute for Family Business (IFB) Director General Elizabeth Bagger said: “Family businesses are at the heart of communities across the country. And this new report shows they are a vital force in our economy too – and how their continued growth will benefit the UK as a whole. Financial services family businesses create a substantial proportion of employment, and we are proud to champion and delighted to celebrate this incredible contribution.

“Family firms clearly have the appetite and ambition for growth. They’re investing in skills and looking to the long term. As a country we need to help more of our smaller family firms to overcome the barriers they face, and support them in scaling up and successfully transferring ownership through the generations.

“For those first generation family businesses looking at succession for the first time, it’s important too to realise that you aren’t alone. There are successful, multigenerational family businesses all around the country who you can learn from.

“The family business sector offers so much potential for long term growth. Championing and supporting our mid-sized firms, and helping smaller family businesses to scale up, must be a priority as we look at what our economy will look like in the years ahead.”

For the first time the report includes information on who manages family firms and female representation in leadership roles. The report reveals that family SMEs are more likely to have female leaders than non-family firms – 81 per cent family SMEs, compared to 58 per cent in non-family SMEs, reported having at least female director, owner or partner.

The report shows that while 91 per cent of family SMEs are family managed, as businesses grow, they are more likely to employ non-family members to run the business, with around half of medium sized family firms non-family managed.

Mid-sized family firms – the UK’s Mittlestand – showed higher levels of growth with 56 per cent of mid-sized family firms growing their turnover, and 51 per cent increasing the size of their workforce over the past year.