Family businesses will emerge even stronger from challenges of pandemic - Chris Smith

The pandemic has left an enduring mark on Scotland’s business landscape, driving businesses of all sizes to evolve. For family run firms, the past 18 months have required more than experience to come through the other side.

Graham’s Family Dairy; Robert Graham, Robert Graham jnr, Carole Graham and Jean Graham.

Scotland’s family firms have been among the most impacted in the world, according to KPMG’s Global Family Business Report which looked at how Covid-19 hit revenues and growth plans. 80 per cent of Scottish firms said the pandemic had affected revenues – 11 per cent higher than the global average.

Family-owned businesses truly are the backbone of our economy and contribute billions to Scotland’s finances. The top 100 alone employ more than 112,000 people and generate turnover of more than £20bn.

The last few years have taken their toll, but family business leaders have the luxury of using generational insight and history to look back at past challenges and learn. Despite the turmoil brought by the pandemic, most family firms have weathered the storm, proving their resilience and experience in dealing with economic adversity.There are several financial and non-financial actions that Scottish families took to steady their businesses while simultaneously laying the foundation for their companies’ longer-term growth prospects. For some, this led to a complete transformation of their operating models and the launch of new product offerings, often with the goal of making the business fit for purpose in a rapidly accelerating digital age.

Chris Smith, family office and private client tax director, KPMG

Not only were they involved in addressing the impact of COVID-19 on their businesses, but they also looked out for the welfare of their communities and expanded their horizons to integrate their business and environmental, social and governance (ESG) strategies to support broader environmental and societal goals.

With an eye on the future, increasingly, family operations are asking how they can sustain the family’s values and purpose to protect its legacy among generations that have new priorities, such as focusing more on ESG.

The pandemic has also brought family businesses together, with older generations stepping back in to provide counsel and experience, and younger generations sought for a fresh perspective. We have observed an increase in family conversations, on several governance and succession-related questions that are being accelerated as business opportunities unfold in entirely new directions.

When it comes to succession planning, family businesses will be aware of continued anticipation of capital gains tax and inheritance tax reform, which could have a significant bearing on future decision making for family businesses.

KPMG is proud to be sponsoring Family Business United’s Scottish Family Business Road Trip 2021 in partnership with Schroder’s Personal Wealth. We’ll be visiting family businesses across Scotland between 27 September and 6 October to hear how their resilience has allowed them to weather the pandemic storm by adapting and diversifying.

Stops on the #ScottishFamilyBizRoadTrip include well known family firms such as Arnold Clark and Graham’s Family Dairy – with the team travelling the length and breadth of the country to meet a broad cross section of the family business community.

Scotland’s family businesses have tackled the challenges of COVID-19 better than most. By showing incredible resilience, agility and adaptability in the past 18 months, it will come as no surprise to watch as they emerge even stronger.

Chris Smith - family office & private client tax director, KPMG