Family-run firms "more resistant" to the economy

News Article - 26 February 2008
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The business health of a family-run firm is less affected by the ups and downs of the economy than other types of companies, it has been claimed.

According to Nicolas Smith, partner of law firm Veale Wasbrough, although family-run companies are not "immune" from the wider economic picture, there is a culture of the whole family helping out to encourage business growth when times are difficult.

He said: "Family-run businesses also tend to be more risk averse than any other corporates and are more able to take a long-term view of profitability because they probably have less pressure to perform for external stakeholders."

In comparison, private equity backed firms often set themselves more challenging business goals for investors, Mr Smith explained.

Quota companies also have increased pressure to retain a competitive edge in the markets, he added, claiming that family-run firms are more likely to survive the impact of the credit crisis.

The Institute for Family Business estimates that family-run companies account for 65 per cent of the 4.6 million private sector enterprises in the UK.

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