For those involved in or with family business
A Scottish Family Business Vision
The Importance of Family Businesses to Scotland
1. The Economy
According to recent Scottish government data 63% of SMEs consider themselves family businesses. Extrapolation from other data suggests 41 of Scotland's 100 largest indigenous businesses are family-owned. Examples include Wm Grant & Sons, D.C. Thomson, Arnold Clark and Baxters. An estimated 50% of all private sector employees work for family businesses, whilst between 25% and 405 of GDP is produced by these forms of business. Whether we measure the importance of a sector or model of business by volume of businesses, contribution to employment, or by GDP, family businesses are of immense importance. It may not be an exaggeration to suggest they are the most important part of the Scottish economy.
2. Social Capital
Being family-owned brings cultural differences to this form of business than some other forms, notably stock-listed companies. Because family business most commonly looks to pass on its ownership to the next generation of the same family there is an ethos of long-term thinking and often of stewardship. In other words family businesses tend not to harm the long-term capabilities of the business in order to obtain short-term benefits.
Related to this is a twin loyalty, to people and place. The fact that the ownership is by a family, and not just one individual or an unrelated group of shareholders, there tends to be a much more tightly-knit mutual experience of the place where the family were raised and still live. Family businesses tend not to move head offices far from their place of origin, largely because more than one family member has deep roots in the area surrounding the business base.
Moreover, because the family live in the area they know many people from the town or nearby villages. Many are friends from school or sports clubs or various other social entities. Family members are typically allowed to come into the business as an extension to their home, and often to do short holiday or weekend work from a relatively early age. Thus by the time they become adults many family business members know their employees personally and know customers and others in the local community as neighbours or acquaintances. Such comparative depth of knowledge and interaction with other stakeholders usually creates a sense of paternalistic or steward-type loyalty to these groups of people, with attendant consideration and care for their wellbeing.
Another cause of such loyalty to people and to the environment and urban space is the "name above the door" motivation. When you are a "well-kent figure" in a community, especially in a commercial organisation, people quickly learn what you do for the benefit or to the detriment of the community or environment. This means there is often little hiding place for misdemeanours, so family-owned businesses often have a stick of having to maintain a reputation for responsible behaviour, as well as the carrot of sustaining one's own backyard.
Family businesses have a well-researched culture of giving back to the local community or further afield. Many of the major charitable foundations in Scotland as elsewhere around the world were created by family-owning businesses, and at a smaller level quiet giving unconnected to abstract concepts such as CSR or brand development is an everyday occurrence.
Thus in a nutshell family businesses are a very important part of the Scottish economy, and a core element of our country's social capital in its every city, town and village.
The Work of the Scottish Family Business Association
The Scottish Family Business Association (SFBA)was set up in 2006 by eight founding directors, all family business owners, under the vision and guidance of George Stevenson, then MD of Mathiesons Bakers, a sizeable business based in south-central Scotland. Its founding CEO Martin Stepek created it as a non-profit organisation, registered as a Scottish charity. Its purpose is to help Scotland's business families flourish through raising awareness of predictable issues unique to family enterprises, providing education and training to learn how to prevent or deal with these issues, to enable families to meet one another and share experiences, learning each from the other, and to signpost family businesses to trusted experts as and when the need arises.
2. Education and Training
SFBA prefers not to undertake the education and training of family businesses directly but through events and seminars at which recognised experts are brought in to do these tasks. It is important that advisors to family businesses - their lawyers, accountants, financial planners, and bankers - are educated and trained to understand their family business clients and how to best serve them, so SFBA act to ensure that there is provision in this area too.
There are a whole range of topics either unique to family businesses, such as whether or not to employ the next generation; or where the nature of the issue has qualities unique to family businesses, eg, succession planning. SFBA both initiates education and training on particular subjects and acts in response to demand from family business members for particular topics to be brought forward.
3. Group Mentoring and Peer Sharing
Probably the most important core work the SFBA does is to being members from different family businesses together in an atmosphere of understanding, openness and confidentiality. To enable this we offer regular peer sessions for up to 15 people, bringing together family business members, advisors, and academics, facilitated by professionals with a view to bringing out from those attending the key issues they are facing. Other members of the group can share their life experiences in order to help the individual better understand the issue they are facing, and possible ways forward. The facilitator may choose to take notes on a particular issue and with the member's consent, pass on details of the issue to an expert in this field so that progress may be made at a future date away from the peer group setting.
There are so many facets of business, ownership and family life that emerge as matters requiring consideration in a family business setting that is it impossible to resolve all of these by education, training or peer group co-mentoring. Part of SFBA's work therefore is to signpost members to specialist experts when issues are raised which cannot be dealt with internally by the family business, by members' groups, or by SFBA. SFBA is paid no commission for such signposting.
Finally SFBA has to take into consideration the overall framework within which family businesses fit within local authority regions, Scotland, the UK and the EU. As and when necessary SFBA will raise with government at the appropriate level constructive suggestions which if implemented would raise the likelihood of family business flourishing in the long-term for the good of the community, country and economy.
I hope in this brief article that I have shown the sheer scale of importance of family businesses to Scotland as a country as well as to the economy more specifically. It's social capital, sense of community, localism, long-term stability, all these and more depend to a large extent on the sustained presence of our family-owned businesses.
I hope too that I have shown how the work of our charity, the Scottish Family Business Association, helps family businesses where they need it most, in those areas of their system which are not supported by any other organisation, private or public. We believe our cause is directly useful to the ongoing work of creating a better society. We ask you to help us in our mission by becoming a member of SFBA and if possible by considering corporate membership, becoming a patron of SFBA, or if you are or have a charitable foundation, by directly supporting our work through a charitable donation to help us achieve our goals.
For further details contact Martin Stepek at firstname.lastname@example.org or on 07986 570 186
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