December 6 2013 Latest news:
By shaun Lowthorpe Business editor
Wednesday, May 23, 2012
Family run businesses in Norfolk are increasingly facing a “succession squeeze” caused by a double-whammy of rising graduate unemployment and a struggle to raise funds to secure the retirement plans of the older generation.
Research by Norwich-based Social Marketing East has highlighted the pressures which family firms are under particularly during the current economic uncertainty.
Figures based on Office of National Statistics data suggest that nearly 20,000 Norfolk businesses are family owned helping to generate about 35pc of private sector turnover and providing 40pc of private sector jobs.
Dr Louise Humphries, director of Social Marketing East, said one particular area of concern raised by firms was the generational pressures which they were facing.
“The current economic climate is really having an impact at both ends,” she said. “Most people have looked to their children to go off and work in another business before they come back to the family business.
“But as graduate unemployment is so high those children are coming back into the business a lot earlier than they would have done, which is fine, but have they got the experience and skill set to lead that organisation?
“The other thing is pension pots,” she added. “Because they are not what people thought they would be, people are staying in the business a lot longer because they cannot afford to retire, so family businesses are getting squeezed at both ends, and in the agricultural sector it really is an issue. In some family businesses they are trying to support three generations.”
However the research also found encouraging signs about the ability of family-run firms to pull through the recession since they tended to be more cautious in boom times taking on less debt. The wide-ranging study, which looked at the experiences of a host of family-run firms in Norfolk across different sectors ranging from Jarrolds to the Norfolk Polo Club, also concluded that family businesses appear better placed to ride out the storm during a recession since although they have experienced similar levels of decline for products and services as non-family firms, insolvency rates are lower.
In the next five years around 1,200 Norfolk family-run firms will hand over from one generation to the next, but statistically only a third survive succession with poor planning blamed as the key reason for the high failure rates.
Dr Humphries, who presented the findings at a family business conference at Birketts in Norwich, said it was important for family firms to plan ahead and overcome a tendency to work in isolation and make the most out of support networks which are starting to spring up in the county
Steven Scarlett, partner at Lovewell Blake, said: “We have certainly seen the incumbent generation hanging on as either their pensions weren’t what they were expecting or the company can’t raise the finance to buy them out as planned. It’s quite well known that there is a lot of graduate unemployment about and that means that more people are looking to join the family business whereas before they would have got external experience and joined later.”
Nathan Muskett, senior associate at Birketts, said the aim of the conference was to provide practical help and support to family-run firms.
“There is often a tendency to for family businesses to stay isolated and the idea is to get them to reach out and connect with each other,” he sai
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