A few facts and figures:
- Family firms account for two in three private sector enterprises in the UK economy – 3 million firms.
- Family firms provide jobs to 9.2 million people – two jobs in five in the private sector
- Family firms make a very large contribution to the UK economy with a £1.1 trillion turnover, almost a quarter of GDP
- Family firms make up nearly half of all Mid-Sized Businesses (£20m – £500m turnover) in the UK.
- Largest family business in the world is recorded as Wal-Mart:
- Family: Walton
Country: United States
Revenue (2013):US$ 476.29 billion
- Family: Walton
Sources: The UK Family Business Sector, Oxford Economics, November 2011, FIB, Tharawat, Campden FB, IFB
So what is a family business?
There is no one formal definition, and very often what matters is whether a business views itself as a family business and the issues that it faces. It’s also worth asking what a “family” is to you?!
We work on the Harvard Business School definition which is:
“Where two or more extended family members influence the direction of the business through the exercise of kinship ties, management roles or ownership rights”
A family business is a commercial organization in which decision-making is influenced by multiple generations of a family—related by blood or marriage—who are closely identified with the firm through leadership or ownership. Owner-manager entrepreneurial firms are not considered to be family businesses because they lack the multigenerational dimension and family influence that create the unique dynamics and relationships of family businesses
The European Commission
A common European definition was adopted in 2009 by , according to which a firm, of any size, is a family business, if:
1) The majority of decision-making rights is in the possession of the natural person(s) who established the firm, or in the possession of the natural person(s) who has/have acquired the share capital of the firm, or in the possession of their spouses, parents, child or children’s direct heirs.
2) The majority of decision-making rights are indirect or direct.
3) At least one representative of the family or kin is formally involved in the governance of the firm.
4) Listed companies meet the definition of family enterprise if the person who established or acquired the firm (share capital) or their families or descendants possess 25 per cent of the decision-making rights mandated by their share capital.