Family Business Scale-ups: Breaking Barriers to Growth
Policy implications
3.2. Talent Strengthen regional talent networks so family businesses can access the skills they need to grow – including high-quality fractional employees and trusted pools of non-executive directors who can support succession planning, bring in external expertise and help address skills gaps created by retention challenges. Universities and other regional talent anchors should be more intentionally connected to family firms to support their growth and hiring plans. Scaling and mid-market family businesses consistently highlight the importance of securing the right talent, noting particular shortages in AI, cyber and research capabilities. While the culture and values of family firms can be a strong draw for candidates, there is significant opportunity to build a deeper talent pipeline by leveraging their local roots, for example, through stronger partnerships with nearby schools and colleges to develop vocational skills and improve careers guidance. Family businesses are also seeking to enhance their leadership and governance structures as they scale up. Access to local leadership development support is important, but so too is the ability to draw on external skills and perspectives through regional networks of fractional specialists and experienced NEDs. As regionally anchored organisations, universities and business schools form a critical part of the skills ecosystem. Ensuring family businesses are connected to these institutions will help them plan for future workforce needs. The recommendations in Tony Hickson’s independent review on deepening university-investor links should be implemented by UKRI to strengthen collaboration between universities, spinouts, venture firms and family businesses. A continued recognition of family firms as a key part of the UK’s scaling and mid-market community should run through refreshed strategies, ensuring they are seen as strategic partners in R&D funding programmes and knowledge-exchange activities.
3.3. Funding Improving family businesses’ understanding of the full range of finance options available to them as they grow remains essential – including greater awareness of patient growth capital and developments in public markets that can support generational transition and succession planning. The British Business Bank’s regional role in enabling funding for scaling and mid-market firms, including those operating in Industrial Strategy sectors, continues to be a critical lever. Equally important is how private-sector investors and advisors engage with the family- business community to build confidence with and understanding of growth capital pathways. The private-sector-led Mid-Market Growth Council also provides a valuable forum for identifying and addressing any gaps in mid-market funding for family firms.
4 Tax: Ensure a stable and consequences that may arise as elements of the tax system evolve. Family scaling and mid-market firms predictable tax framework and review any unintended want certainty and consistency in taxation policy. They are significant users of R&D tax credits and rely on EIS/SEIS mechanisms, so the speed of R&D claim reconciliation, clearer eligibility criteria and simpler scheme operation are all seen as essential. The entrepreneurial prospectus review of taxation remains an important vehicle for addressing the tax considerations facing scaling family firms, particularly as many family-run businesses now exceed the thresholds for initiatives such as EIS. Family businesses also frequently raise concerns about the future impact of Inheritance Tax and how it may affect generational transitions. The potential tax burden following the death of a family member can, in some cases, force the sale of the business to overseas investors or lead to its break-up to meet liabilities. It will be important for ongoing tax reforms to consider these implications carefully.
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