can family businesses survive
Can family businesses survive?
Chapter oneCan family businesses survive?
The Future of Family Business
A sector under pressure
The research demonstrates that family businesses are operating against a backdrop of growing pressure.
When asked about the biggest challenges facing family businesses today, 71% identified rising business costs. The political and economic climate was cited by 57%, while 43% highlighted wider business taxation and 38% pointed to regulation and compliance costs.
These concerns were reflected consistently throughout our research.
Business owners discussed rising wage costs, National Insurance increases, regulatory obligations and tax changes. Advisers reported that many clients remain positive about their business prospects but increasingly cautious when making long-term decisions.
Despite this, interviewees were far from pessimistic; a Director of a long-established family business described Britain as a strong environment for private enterprise and argued that family businesses have always demonstrated resilience through periods of change.
The challenge, therefore, is not whether family businesses can survive pressure, but whether they can continue to plan effectively for the future.
The Russell-Cooke perspective
Succession planning is about preserving options and creating resilience, not simply reducing a future tax bill.
James Cook
Partner · Private client
The current debate around inheritance tax has certainly raised the issue much higher up the agenda for business owners: many family businesses have been forced to think much harder, and much sooner, about succession planning. The challenge is not simply how to transfer wealth, but how to do so safely and sustainably. Business owners want confidence that what they put in place today will continue to work for future generations, while protecting the business from risks such as relationship breakdown, incapacity, disputes or liquidity pressures.
In our experience, the most successful plans are those that start early and consider a broad range of scenarios. Tax remains important, but it should not be the sole driver of decision-making. Families need to think about governance, contingency planning and how future generations will actually manage inherited wealth and responsibility. Ultimately, succession planning is about preserving options and creating resilience, not simply reducing a future tax bill.
The uncertainty problem
Many interviewees repeatedly returned to the theme of uncertainty. Notably, the concerns expressed were often less about specific policies and more about the inability to plan confidently for the future. One senior adviser to family businesses and family offices suggested that businesses and family offices can usually adapt to difficult conditions when the rules are clear, but that the greater challenge comes when policies, taxation and market conditions continue to shift.
The survey findings support this view, with more than half of respondents citing the political and economic climate as a major concern.
For many families, certainty appears to have become just as valuable as financial support. A senior adviser to family businesses and family offices observed that business owners are generally capable of adapting to changing tax and regulatory environments, provided they understand the rules. The greater challenge, he noted, is planning effectively when policy, taxation and market conditions remain uncertain.
Family businesses appear largely confident about surviving the next few years, but are much less certain about surviving the next generation.
Is confidence holding up?
Confidence remains relatively strong in the short term; almost two-thirds of owners are very confident their business will remain family-owned over the next two years.
However, confidence declines significantly over longer time periods; only 38% are very confident when looking five years ahead and just 24% express the same confidence over a ten-year horizon.
This reveals that family businesses appear largely confident about surviving the next few years, but are much less certain about surviving the next generation.
Not all family businesses are the same
One of the clearest findings from the research is that family businesses do not face identical challenges.
The data suggests there are effectively two different models of family business operating in the UK today. At one end are smaller family-run businesses, where ownership, management and family life remain closely intertwined. At the other are larger family-owned enterprises with more formal governance structures, broader leadership teams and greater separation between ownership and day-to-day management.
This distinction appears to have a significant impact on long-term confidence and resilience.
| Micro businesses | Larger family businesses |
|---|---|
| 94% family managed | 48% family managed |
| 56% cite family circumstances as a risk | 24% cite family circumstances as a risk |
| Lower confidence over 10 years | Higher confidence over 10 years |
| More dependent on individuals | More dependent on systems and governance |
Size appears to be one of the strongest determinants of resilience.
Smaller family businesses often operate as an extension of the family itself. As a result, illness, retirement, changing family circumstances or the absence of a successor can have an immediate impact on continuity.
Larger family businesses appear more insulated from these risks. Although they are more likely to attract external investment or acquisition interest, they also appear more confident about remaining family-owned over the long term.
The likely explanation is not size alone, but the structures that often accompany growth: stronger governance, more formal succession planning and less reliance on any one individual.