The full report shows how important such family businesses are to the UK GDP.  

• UK family businesses provided 9.2 million jobs, 40% of total private sector employment, or 2 in 5 private sector jobs. To place this in context, this is around 50% more than the entire UK public sector and makes family firms the largest source of employment in the private sector.
• Family firms generated revenues of £1.1 trillion in 2010, or 35% of private sector turnover. On these revenues, family firms made a £346 billion value-added contribution to UK GDP, or nearly a quarter of the total.

It is no surprise that during the recent recession demand for credit rose, but family firms were more successful in obtaining external finance.

• According to survey data, the proportion of SME family businesses that applied for finance over the previous year rose from 18% in 2008 to 30% in 2010.
• Survey data show that 76% of family firms that applied for external finance in 2010 were successful compared to 68% of non-family firms.

And also family businesses appeared less vulnerable to corporate dissolutions.  In fact insolvency rates rose in family firms, but they are lower for family firms across all size bands than for their nonfamily counterparts - possibly a reflection of stronger balance-sheets prior to the recession.

However not everything is perfect as family businesses plan for the future:

Scaling up is an issue for family businesses that have growth ambitions. Building greater management capability is therefore critical to enabling family firms to develop strongly.

In a different survey it showed that 48% of family firms surveyed had yet to identify their successor. Succession will become a larger issue as the ‘baby-boomer’ generation reaches retirement age over the next few years – it has been estimated that over the next five years an average of 172,000 family firms will leave a generation’s control each year.

So if you are an owner manager of a ‘family’ business and need help on how to grow turnover in a sustainable way, get investment ready, plan for succession and develop a possible exit strategy, start discussing it now - call Phil on 07720 397040 or email him.

When survival is the key driver, dropping price is an understandable response by the sales force as volumes fall. This might be the right thing to do if the product or service you’re selling is price elastic and so long as a reduction in price will increase sales volumes.  So is that good news?

Discounts are often driven not by an understanding of market dynamics but by sales force incentives.  Sales teams are frequently measured by sales volume, rather than the quality of the revenue they bring in, i.e. profitability.  If a salesman is rewarded for selling more, then the easiest way to achieve that objective is to discount prices.  This may not be the best in the medium term for the business.

All companies, and in particular SME organisations need to look at their pricing processes and controls to ensure their pricing strategy is effectively implemented, reviewed and managed.  Performance metrics should be linked to profit as well as volumes and appropriate controls should be embedded such as target and limit prices.  For example, a stepped approach to discounts based upon actual spend (not planned spend) incentivises every-one.

So if you have to offer discounts, be aware of when, how much and to whom – and equally important for how long. Have you had a conversation with a current customers about levels of discounting and tried to justify what is being offered to them or other companies and why?  It is a very difficult subject to discuss and explain rationally, so be prepared. 

If you wish to discuss with Phil how to structure pricing and incentive plans that help sustainable growth, call Phil on 07720 397040 or email him

By developing a disaster preparedness plan and implementing technologies that support business continuity, SME businesses can give themselves a defence against most possible disasters. OK, doing so requires some effort and investment, but when faced with the reality that your business might not make it through a disaster, is it really something you can afford to delay or neglect altogether?

First determine the potential disasters that could affect your business, remember that while some disasters are physical (i.e. floods, snow storms, etc.), others can be virtual (i.e. network shutdowns, cybercrime, etc.).  If you have employees who would be unable to reach the office if a natural disaster strikes, consider how every-one would continue if they have remote working capabilities.  Most homes have computers with broadband and individuals do have mobile phones.  In a disaster these could be used to keep your business running, most employees will not mind working from home if discussed with them in advance!

The following guidance relates to two different areas to consider about disaster preparedness and disaster recovery – your technology and your business itself. It is important to realise that in many cases, having the right measures in place can help your business avoid disaster in the first place, while other tactics will aid you in getting your business up and running again if disaster strikes.

Explore cloud-based software solutions designed for SMEs, these will enable you to store information in a secure, offsite location and access it anywhere you have an Internet connection. Cost-effective cloud-based software solutions often come with company wide capabilities, making it a wise investment regardless of whether or not your business encounters disaster.  Why would you have your own email servers in your own offices?

If you can’t or don’t wish to invest in an online backup solution, regularly replicate your hard drives (ideally on a weekly basis), using external disk drives. Remember to make this method fail proof you will need to remove the disk drive from the premises, in the event that a physical disaster occurs and you aren’t able to retrieve it in time.

Online backup options – If you don’t store all of your data in the cloud, consider investing in an online backup solution that will safeguard all important data stored on your hard drives and make it easily accessible in the event of disaster. If you and your workers store critical data on mobile devices, make sure that data also is protected by your online backup solution.

Document your environment – Be sure you or some­one within your company has an understanding of all the important systems in your network environment – and document it somewhere. Take the time to identify all of your critical systems, keeping a record of key supplier contact details, usernames, etc. Determine how long, if at all, those systems can be down during a rebuild in order to ensure you can still operate and maintain customers.

 The next part of this series will guide you through some high level measures to help you business survive any disaster. If you cannot wait or just want more information or to arrange an appointment, contact Phil on 07720 397040 or 0208 8920228, or email him

As this questioning becomes more serious and focused the owner would typically turn to a trusted professional for a valuation. There is a high probability that this well meaning professional will relate the value of the business to the historic profitability of the business. This seems reasonable at first glance, and accurate if taken as a simple accounting transaction but is almost guaranteed to seriously undervalue any business. In nearly every case, when a business owner uses this traditional method to calculate the worth of their business it significantly underestimates what can be achieved. In other words, the valuation method is fundamentally flawed.

Traditional methods of taking a business to market focus on past performance and past result. The truth is that nobody ever buys a company's history; they only ever buy its future.  And this future would be under the new management.

Also, these traditional methods will often encourage business owners to go to market with a value attached based on multiples of profit. This is the probably the biggest single reason for a poor outcome and why businesses do not sell.

It is a fact that these traditional methods rarely generate sufficient numbers of potential acquirers. According to research these methods on average will only identify 12 potential purchasers, most of these are unqualified purchasers who are just searching the market and not serious enough to be realistic purchasers.

There are other alternatives than simply speaking with your trusted accountant which can result in generating a real valuation of your business.  This valuation can and will be increased if the owner manager actively works with an experienced business advisor to prepare the company to be ‘investor ready’ and ‘exit ready’.  This will increase the value he or she can achieve above a simple historical multiple of past performance, and equally important reduce the time to exit and the stress involved as due diligence will be a simpler process.

For more information or to arrange an initial appointment, contact Phil on 07720 397040 or 0208 8920228, or email him

Also family firms generated revenues of £1.1 trillion in 2010, or 35% of private sector turnover. On these revenues, family firms made a £346 billion value-added contribution to UK GDP, or nearly a quarter of the total. Family businesses are estimated to have contributed £81.7 billion in tax receipts to the UK Exchequer, or 14% of total government revenues in 2010.

Pretty impressive statistics?   It is perhaps the behaviour of owners which really reveals the true nature and relative strengths of family businesses. Particularly pertinent to the current economic circumstances are findings which revealed that family firms are more likely to invest for the long-term and focus on long-run returns, rather than quarterly results.

There is evidence that families tend to draw smaller salaries and dividends, allowing more profits to be reinvested back into the business it is argued that family businesses are more prepared than other firms to continue investing during downturns, giving them an advantage over other quoted and Private Equity-owned firms where investment tends to follow cash flow more closely. Other findings across a range of surveys suggest that in family firms, managers and owners interests are better aligned, staff loyalty is higher, working practices are more flexible, corporate social responsibility is taken more seriously and the management approach is more flexible with quicker decision making.

Where owners of family firms no longer see generational transfer as viable or desirable, they provide some of the most compelling opportunities for acquisitive trade or private equity buyers; these firms have significant potential for growth. It is clearly vital that the potential of such a significant contributor to the UK’s economic well-being is maximised

Almost on a weekly basis on the national news there has been several well published attacks on company websites stopping any internet traffic going to them (this is called a denial of service or hacker attack), and means the company cannot do business through this key channel.  

What goes through your mind?  Sympathy immediately followed by the question, “If that happened to me, would my business survive?”

This is a really key question to be asking yourself, regardless of whether you live in an area prone to natural disasters. Disasters can happen anytime, anywhere, and they’re not just physical. Virtual disasters wreak havoc on IT networks and can be just as destructive as physical catastrophes; paralysing businesses and threatening their very survival.

A recent  2011 study released by the UK Security Minister found that cybercrime in the UK cost £27 billion, with businesses taking the biggest hit, losing £21 billion The US Department of Labor estimates more than 40 percent of businesses never reopen following a disaster and, of the remaining companies, at least 25 percent will close in two years.

 With fewer resources than larger corporations, small and medium sized businesses have a harder time recovering from virtual and physical disasters than their larger counterparts. Hoping that the small print in your insurance policy will cover the costs is unrealistic, and even if true, it will take many many months before any payout will be available.  In the meantime, your customers will probably have no choice but to find other companies to work with.

 I don’t bring this up just to make you afraid, but rather to make you aware and offer resources and strategies that can help get your business get ready for “the worst,” should it happen.  Over the coming blogs I will present some practical, simple and doable approaches to address this.  Also I hope to show how some inexpensive and readily available technologies which will not stop all disasters but should allow you to cope and your business to survive.