Family businesses will lead the post-Covid recovery

Family businesses are the backbone of the economy.

The life of business all across the country, the bedrock of communities providing local employment, driving innovation and deeply embedded into all sectors of society.

The family business sector consists of more than 170,000 firms operating in every city and town in the country, encompassing food and agribusiness, hospitality, manufacturing as well as a wide variety of general services.

Visible at the core of communities rural and urban, more people in Ireland earn their living from family-run enterprises than from foreign-owned businesses and the public sector combined.

“Family businesses make up the largest single group of employers in the country, employing a million people - more than twice the public sector and the FDI combined,” explains John McGrane, executive director, Family Business Network - the organisation for experiential learning, mutual support and advocacy for and on behalf of Irish families in business.

“They are far and away the biggest employers in the country, and critically, are not just in the big cities like much of the Foreign Direct Investment companies are, but in every town and constituency. Crucially, they give back in a way that foreign companies are never in a position to do.”

The wellbeing of communities is powered up by family businesses, who employ in the locality and whose wages are spent in the locality on everything from groceries to retail to general household services.

“Family businesses are not saying that they want a special pat on the back,” John stresses. “All they’re saying is: ‘we want a fair crack of the whip.’ What they don’t want to feel is that doing all of the good work is not appreciated for the very important enabling resource that it is.”

In the recent 2020 National Family Business Sentiment Survey, business confidence fell among family firms, reflecting the challenges with Covid-19.

Ireland’s ‘regressive’ tax system ranked top of the concerns expressed in the survey, bolstered by two-thirds of family businesses’ concerns about the impact of Brexit on logistics and supply chains.

The high cost of business insurance ranked the sector’s third greatest concern. 82% of respondents indicated that supporting the next generation is a key ambition, with 48% of the businesses surveyed seeking to prioritise professional training and mentorship.

With the right help, 58% of family firms will create jobs this year

In addition, the current tax system for transferring family businesses from one generation to the next was cited a significant obstacle.

However, in contrast to the deep concerns revealed by the survey, 58% of family businesses said they are likely to create jobs in the next 12 months providing there is a supportive political and economic environment — highlighting the resilience of Irish family businesses and their willingness to adapt to change.

Some 88% of family businesses say that stimulating the economy is the best way to fund Ireland’s costs associated with Covid-19.

“Family businesses are inherently optimistic,” John stresses. “They come from the sweat of peoples’ brows, local entrepreneurs deciding to go further, reach more, take a risk and give back by engaging people in their own communities.

“When trouble comes, family businesses pull in their horns, they work long and late, and make sure they can maintain as many of their employees as they can. And when trouble backs off they then re-invest all over again.”

The sector is intent on doing this when Ireland emerges from the pandemic in a jobs-led recovery. He adds that indigenous Irish businesses which contribute 80% of Ireland’s economic value, will drive Ireland’s economic recovery if the appropriate support is provided by Government.

“When the hundreds of thousands of people who were made unemployed return to the jobs market, the reality is that the jobs for them will be generated by the family business sector - not by Foreign Direct Investment or the State sector, because they didn’t lay off anybody.

“The Government will look to family businesses to re-create jobs in communities around the country so that they can be less dependent on State subsidies.

“The revenues from those jobs are spent in the local community and the employment taxes are recycled into the public purse for the betterment of all. And the family business sector is not only happy to play that part, they are proud to play that part.”

Family businesses are an integral part of the commercial landscape, he concludes: “They were here before, they’re here now, and they’ll be here afterwards. The fundamental thing is that they don’t cut and run when things get tough.”