Family Businesses Still Struggling

[01 September 2010]

A recent survey of Scottish family-owned small and medium-sized firms revealed that half of those questioned are making personal sacrifices to keep their businesses afloat and more than 75% have not seen any significant improvement in their bottom line for some time now.

The survey indicates that although the recession may have technically ended, many of Scotland's family businesses are still not seeing any signs of meaningful growth and are concerned about the threat of a "double-dip" recession.

Typical sacrifices by owners included making cash injections, foregoing salary or taking a considerable reduction where they paid themselves through dividends, as well as postponing pension contributions. In extreme cases personal assets, including homes, were put up as security for bank finance.

28% of those surveyed said that their succession plans-management buy-out or trade sales to allow an exit for the owner, or passing on the baton to another generation- had been directly affected.

The survey included firms in the manufacturing, construction, distribution, technology, and professional services sector. Official data shows that economic recovery in Scotland stalled in the first quarter of 2010. GDP was unchanged from the final three months of 2009 when the economy exited deep recession with growth of 0.3 %.Perhaps surprisingly, 72% of all surveyed said that they did not believe that huge spending cuts would have a direct impact on their businesses.