Family-owned businesses are often referred to as the ‘backbone’ or ‘bedrock’ of the economy – descriptions that are fully deserved when the true scale of their economic contributions are considered.
Significant Economic Contributions
Figures provided by the Institute for Family Business
show that as many as two thirds of businesses in the UK are family owned, and together they generate more than a quarter of the country’s GDP and provide employment for over nine million people.
When it comes to Scottish family businesses the figures are equally impressive. A recent repor
t by Family Business United Scotland (FBU Scotland) revealed that the top 100 family-owned companies in Scotland generate profits of £1.1 billion and employ around 103,000 people. And contrary to the popularly held belief that family businesses tend to be small, low-turnover operations, Scotland’s top 100 includes large, nationally recognised organisations such as Arnold Clark, The Edinburgh Woollen Mill (Group) Limited and Farmfoods Ltd.
“Our research dispels many myths about family businesses being small or lacking in ambition,” explained FBU Scotland founder Paul Andrews. “The top 100 have demonstrated impressive abilities to respond to market forces and to innovate and evolve in order to remain current, relevant and profitable.”
What is a Family Business?
A research report from the UK Government
into family businesses highlighted that there is no one single agreed definition for a family firm. However, the definition used by the Institute for Family Business is similar to that of the European Commission, and says that a family business is one where:
- the majority shareholding is held by the person who established or acquired the firm, or their spouse, parents, child or child’s direct heirs;
- the majority of decision making rights are indirect or direct;
- and at least one representative of the family is involved in the management or administration of the firm.
Family businesses can be found in every industry sector, however according to the report from FBU Scotland they are more prevalent in some sectors than others. Around 32% of total turnover from the top 100 firms is apparently generated in the motor retail sector, where eight of the top 100 companies can be found. The second largest turnover is generated in the food and drink sector (21.47% and 17 companies), followed by property and construction (12% of total turnover and 21 companies).
“Family businesses are the backbone of the Scottish economy yet don’t get the recognition they deserve as innovators and investors,” commented Tom Craig, Chair of Family Business United Scotland. “This research quantifies their very significant contribution both in financial terms and in supporting vital jobs and training. Scotland’s onshore GDP is £149 billion – the top 100 family businesses account for an impressive 11% of that.”
Supporting Family Businesses – Both New and Old
Some family businesses are still under the management of their original founders, whilst others have been around for several hundred years. In fact, butcher firm RJ Balson & Sons has been in business
since 1515 and is now in its 26th generation of management.
Whether your family firm is newly established, or has been around for generations, Murray Beith Murray is ideally positioned to help. We have acted as trusted advisors for many business families through successive generations, often working collaboratively with other business advisors to achieve the best possible results for our clients. Since Murray Beith Murray’s establishment in 1849, we have overseen and supported family business clients in the creation, management and succession of wealth and we are credited with a personal understanding of the complex issues facing family businesses today.
Contact Family Businesses Lawyers Edinburgh
For expert legal advice to address the issues when running a family business in Scotland and managing succession then contact our specialist lawyers today. We will work with you to open the dialogue, tackle the challenging questions, and make plans for the next generation of the family.