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2m, But At Least The Statistics Demonstrate The Economic Importance Of Small ...

2m, but at least the statistics demonstrate the economic importance of small companies in terms of employment generation and wealth creation, particularly at a time when larger companies in the West are always looking at ways of shedding staff, even at times of growth.

The Business Insight website, www.bestforbusiness.com , asserts that 60% of UK businesses are family run and that, compared to non-family-run businesses, they have more productive employees, survive longer and provide more opportunities for women. Despite these positives, only 25% make it to the next generation.

Statistics from the USA provide a more comprehensive picture on the importance to the economy of specifically small family businesses. According to Ronald Reece in his paper How to Mix Blood and Business Safely and Successfully there are
10-12m family-owned businesses in the USA

These represent 90% of all US businesses
70% of these businesses are managed by the family

Family businesses provide 55-60% of the workforce and
Contribute 50% of GDP

So, they are certainly important economically, but small businesses are prone to early failure and family businesses, despite possibly lasting longer than non-family businesses, also have a 75% chance of not making it to the next generation.

The next section examines definitions and characteristics of small businesses in general and small family businesses in particular.
Definitions and Characteristics of Small Family Businesses
Small businesses are defined by the DTI in the UK as businesses employing 0-49 people. Once above the 50 they become medium-sized businesses.
It is difficult to arrive at an acceptable, precise, definition of a small family business as there are so many different types of business but the simplicity of the following definition is appealing:
...a family business is one where a family strongly influences its
management

A small family business becomes therefore a business employing no more than 49 people, where a family strongly influences its management.
So, what are the particular characteristics of small businesses in general and small family businesses in particular?
Small business owners of my acquaintance often use the expression feast or famine to describe the state of their businesses. In other words, things never seem to move along steadily. Either things are wonderful (usually meaning that there is cash in the bank) or things are terrible (usually meaning there is little, if any, cash in the bank and there are few, if any, orders in the pipeline).

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