The State of the Nation: The UK family business sector 2021-22
5 January 2024
Date: December 2022
Using secure survey data, researchers have provided new evidence on the effect of the Covid-19 pandemic on family businesses, and how it impacted their operations and performance. This research also looks to the future, outlining how family firms are feeling about the post-pandemic economy, and how they are considering issues such as energy usage, technology adoption, and the UK’s exit from the European Union (EU). The findings were cited in a parliamentary research briefing on the contribution of family businesses to local communities.
The research was carried out by Family Business UK, formally the IFB Research Foundation, a charity that aims to be the UK’s centre of excellence for family business research, in partnership with Oxford Economics. They aimed to understand how family businesses have been impacted by the Covid-19 pandemic and the future obstacles these businesses face.
The Management and Expectations Survey collects information about the management practices of businesses in Great Britain and their expectations for their business in the future. Along with the survey questions the data includes characteristics of the businesses with variables such as region, employment size, age and foreign ownership.
The 2020 survey covered the period 2019-20, and sampled 50,000 businesses registered in Great Britain, from which over 12,000 responded.
The project also used data from:
- The Department for Business, Energy and Industrial Strategy’s Longitudinal Small Business Survey
- A 2020 study by the IFB Research Foundation and RepGraph
Digital Object Identifier (DOI): Office for National Statistics, released 10 January 2022, ONS SRS Metadata Catalogue, dataset, Management and Expectations Survey - Great Britain, https://doi.org/10.57906/r0kk-pb22
The researchers conducted their analysis using the information from the datasets and surveys highlighted above, which allowed them to define, characterise, and analyse family businesses. The data sources enabled the researchers to explore the impact of the Covid-19 pandemic on how firms operated and how they adapted to the pandemic. The research team also looked at firms’ expectations for the future and wider factors that impact on family business such as the UK’s exit from the EU, climate change and adoption of technology.
This research found that there are 4.8 million family businesses in the UK, which were directly responsible for 13.9 million jobs in 2020. That is about 85.9% of all UK private sector businesses and 51% of the total private sector workforce. The family business sector generated £1.7 trillion in turnover and £575 billion in gross value added (the contribution a company, institution, or sector makes to Gross Domestic Product). Large family businesses contributed around £38 billion in taxation. This research shows that family businesses are prominent in all sectors and all regions of the UK economy.
The Covid-19 pandemic presented the UK’s family businesses with new challenges, and a large proportion of family firms saw their turnover fall. Many had to make far-reaching adjustments to how they operate and deliver services to ensure they could stay open and survive, including furloughing staff or making redundancies. Some family firms were unable to adapt operations as easily as their non-family counterparts, such as working from home.
In the surveys, family businesses indicated that the UK’s exit from the EU would likely contribute to the rising cost of imported products. The report indicated that this would be compounded by rising energy costs, which became particularly important in the second half of 2022. These are new obstacles recently added to the generally competitive landscape, since family businesses consistently indicate that competition is one of the biggest obstacles they face.
However, three-quarters of family businesses said they plan to grow their turnover, many by increasing the skills of their workforce or recruiting new staff. Family firms continue to work as platforms of opportunity for women and minority-ethnic groups compared with non-family firms. Furthermore, as the cost of energy becomes more important to the success of all UK businesses, family businesses with ten or more employees have adopted energy-saving measures at a faster rate than other small and medium enterprises of similar size.
This research provided new evidence on the effect of the Covid-19 pandemic on family businesses, and presented important new insights about the family business sector and its economic contribution. The research was cited in a parliamentary research briefing: ‘The contribution of family businesses to local communities in the UK’. In 2023, the Institute for Family Business started Family Business Week, as a way to highlight and celebrate family businesses, and support them in recovering from the pandemic and position them at the forefront of the economic and social revival for the UK.
Publications and reports
- Oxford Economics and IFB Research Foundation report, December 2022: The State of the Nation: The UK Family Business Sector 2021-22
Blogs, news posts, and videos
- IFB Research Foundation press release, December 2022: Family businesses remain committed to growth despite challenging operational environment
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