But why are so many family businesses cautious of communicating this impact in a proactive way? How can they get onto the front foot with communicating their positive impact, and what would be the best way to do it?
Family businesses are massive contributors to the Exchequer
According to the latest IFB report, the UK is home to five million family businesses who, collectively, pay more than £180 billion in tax every year, almost a quarter of Britain’s total tax revenues. They are the backbone of our economy. Not only do they contribute tax, but they also employ more than 13 million people.
They have a social impact too. Millions of family firms donate a significant amount of their time, money and resources to charities and their local communities. In 2017, personal and family foundations gave to £1.87 billion to charity, an increase on the previous year of nearly a fifth.
While the value of family-owned businesses is clear, often the families and entrepreneurs behind them are hesitant to proactively communicate that positive impact.
But while the value of family-owned businesses is clear, often the families and entrepreneurs behind them are hesitant to proactively communicate that positive impact.
This is understandable. On one hand, many large family owned businesses are worried about bringing undue attention to themselves as owners. There are countless examples of families who have tried to do good in the world – whatever their other faults – and fallen victim to negative attention. The Sackler family are only one recent example.
On the other hand, many private businessowners want to protect their family from an inquisitive media. The family ownership structure naturally leads to narrowly focussed media attention. This is not the case for listed entities, for example, who will have a more diversified shareholder base.
Family business owners may also worry that any short-term benefits from showcasing their positive contribution will inevitably turn negative.
Family business owners may also worry that any short-term benefits from showcasing their positive contribution will inevitably turn negative: all positive coverage, eventually, begets criticism. The argument goes that the mere act of putting their head above the parapet will make them a target for groups or newspapers that, perhaps, do not think so positively of wealth creators.
Families must get on the front foot to highlight their impact
But the truth is that while many business families may feel they have a choice in the matter, they increasingly do not. If they are not defining how they want to be seen, it will be defined by others.
There is an increasing demand amongst the public for more transparency from companies. In practical terms, this trend has played out in recent changes to UK legislation, such as the introduction of the beneficial ownership register for offshore owners of UK properties, gender pay gap figures, and supplier payment practices information. But this is only the tip of the iceberg.
As more information comes into the public domain and is made quickly findable online, business families need to approach this challenge strategically: what image do I want to project? Families need to get on the front foot, otherwise that image will be set for them by other sources.
Families need to get on the front foot, otherwise that image will be set for them by other sources.
For many business families right now, one of the first – and perhaps only result – when you search their name online is a Companies House record or perhaps an entry in The Sunday Times Rich List, reducing them to net worth, revenues, and profits. A family is – and should seek to be – much more than that.
The good thing is that business families – as we saw above – already make a substantial positive impact on the world. The positive impact is there for families to communicate, if they wish.
Families also already have data at their fingertips to substantiate their impact: the number of people employed, taxes generated and collected, contribution to the industry supply chain through supplier costs, payroll, charity donations, and much else besides.
But this information is often hidden in PDFs that are never read by the public, peers, or the media – and have limited or no visibility on search. Family businesses are sitting on this information, and with the right strategy in place, they can communicate this information effectively.
Communicate your family’s impact in a controlled way
Another reservation that I hear from families is that they worry about getting this information out into the wider world in a balanced, representative and fair way. But this anxiety no longer holds water.
It is no longer necessary for families to communicate via a third party, such as the media. Instead families can go directly to their target audience online. Families can make sure that their positive impact is showcased online, either via their own company, family office, or charitable foundation website.
The public have a preference for gleaning information directly from a family’s own website.
A website that ranks highly on search engines allows families to ensure that accurate, up to date, and representative information is visible first, providing peers, the public and the media with a source of information.
Recent research from Transmission Private found that when stakeholders – peers, employees and members of the public – are looking for information about a company or family, the vast majority will look online first, and they have a preference for gleaning information directly from a family’s own website – rather than news stories, social media, or Wikipedia.
Successful family businesses have a serious, credible and proven impact on the UK. They must start to be more proactive in their approach to communicating it.