PROFESSOR DYLAN JONES-EVANS

The importance of family businesses to the UK economy should not be underestimated. In every town and city, family-owned firms are making an impact on wealth creation and employment in their local communities.  The contribution of this important sector is highlighted in the latest “State of the Nation” report from the Institute of Family Business (IFB) Research Foundation. Undertaken in partnership with Oxford Economics, the study presents key insights into the characteristics and challenges facing the family business sector in the UK in 2019, just prior to the Covid pandemic. So what the report tell us? First of all, family owned firms - defined as those companies where a family owns over 25 per cent of equity - made up 86% of the 5.2 million businesses in the UK in 2019, a slight decline on the previous year. Despite this, they remain a key source of jobs accounting for 40 per cent of all employment in the UK economy (or 14.2 million people) and whilst overall private sector empl...

For the business community in Wales, this week’s budget did not have anything that had not been discussed in the press in the prior few weeks with one notable exception, namely the announcement that there would be a new £130m fund, to be delivered by the British Business Bank, to support ambitious Welsh firms. For those of us who, for years,  had been calling on the British Business Bank to make this type of funding available to the business community in Wales, it was a surprise as there had been indications over the years that officials within the British Business Bank were not convinced by the case for any substantial investment.  In fact, I remember an event in London shortly after the publication of my access to finance report for the Welsh Government in 2013 which had demonstrated, unequivocally, that Wales had been largely ignored in terms of the provision of venture capital by the British Business Bank.  Speaking to one of its senior officials, I tried to make the ...

  As we bid good riddance to 2020 and look forward with optimism to a very different year thanks to the recent approval of the Oxford vaccine, the performance of small and medium sized enterprises (SMEs) will be key to any economic recovery.  That is why the recent report from the Enterprise Research Centre - The State of Small Business Britain – is an important examination of the impact of Covid-19 on businesses but also, more importantly, examines the challenges that policymakers need to focus on in 2021. The first key issue is that of digitisation and it is not surprising that the report notes a shift in the adoption of advanced technologies with around half of SMEs introducing new digital technologies as a priority in the last 12 months. In addition, two out of five stated they had made some changes in their use of digital in response to the pandemic, with many adopting technologies they had never previously used.  Obviously, it could be argued that whilst this trend...

One of the major concerns from the tech sector when the Covid-19 pandemic hit was that the availability of funding into those businesses that can grow quickly in knowledge-based sectors would be dramatically curtailed as individual and institutional investors withdrew from the market. This was the main reason why the Chancellor of the Exchequer introduced the £500m Future Fund to provide government loans of £125,000 to £5 million to equity-funded UK-based companies which would then be matched by investors. Whilst this intervention would have been largely targeted at formal venture capital companies, very few informal individual investors would have directly benefited given the lower levels of funding they provide.  However, these business angels are critical to any economy as they often are the ones who will put up the money for high risk investments into new exciting companies that the banks tend to ignore. More importantly, the better angels not only invest money but often, as fo...

Earlier this month, TB Davies celebrated 75 years of trading continuously from their base in Cardiff and as a fourth-generation family business, is another example of how, as recent studies have shown, it is family businesses that dominate most economies in the World.  According to the Family Entrepreneurship Report from the Global Entrepreneurship Monitor – which interviewed 150,000 adults across 48 economies – over three quarters of entrepreneurs co-own or co-manage their businesses with family members.  This supports other data which has indicated that between 70% and 90% of all firms in the European Union would be considered family businesses and 75% of all businesses in the United States are family-owned firms.  Indeed, a state of the nation report from the Institute for Family Business (IFB) estimated that there were some 5.1 million family-owned businesses in the UK, representing 88% of the country’s private sector firms. They employed 14.2m people (40% of the U...

When I conducted the Access to Finance review for the Welsh Government seven years ago, it was the affordability of the repayment of a loan, rather than the cost of borrowing, that was cited in interviews with banks, intermediaries and small businesses as being the main obstacles to accessing bank finance.  From discussions with the banks at the time, it was clear that more stringent rules regarding credit availability has reduced the terms of loans and the affordability to many businesses.  This was also the conclusion of a major review of the Royal Bank of Scotland’s lending to small firms which found that whilst the average contractual term for commercial banking loans was approximately nine years for accounts opened in 2008, this had been shortened to approximately five years in 2009 and had largely continued at that level since for most accounts. Given this, one of the recommendations that we made for the creation of a new Development Bank of Wales following the review wa...

When I undertook the Access to Finance for SMEs review for the Welsh Government seven years ago, the most invaluable source of data for the investigation was the SME Finance Monitor.  The information gathered by the largest study of its kind in the UK not only provided accurate and timely data on how SMEs were accessing funding from a range of different sources but was also a useful predictor of the state of the small firm community. Given this, the latest report from the monitor on how SMEs have been impacted by Covid 19 is an invaluable indicator of what has been happening to entrepreneurs across the UK during the recent pandemic with 4,511 interviews conducted between April and June 2020. Not surprisingly, it found that 87% of SMEs had reported being negatively affected by Covid 19 with the biggest impact being a reduction in sales of more than 50%.  In fact, six out of ten SMEs were expecting this lower turnover to continue over the next few months with the biggest impact ...

As we end the sixth week of lockdown for the UK economy, the government continues to adjust its support for businesses affected by the Covid-19 shutdown.  This flexibility amongst politicians is a breath of fresh air and the Chancellor Rishi Sunak must be congratulated for responding to the concerns of entrepreneurs and CEOs. The latest initiative involves changing the terms and conditions of the Coronavirus Business Intervention loans scheme (CBIL) which had attracted much criticism for being too slow in getting money out to struggling firms across the UK. For once, Whitehall was not to blame and instead, the banking industry seemed to have been unable to cope with the demand for this type of lending through their present systems.  There was also the suspicion that some lenders were, instead of piling in to help the small firm sector in the way that they had been supported by the taxpayer during the last recession, were reluctant to risk any of their own funds under a scheme ...

Three years ago, this column wrote a piece about the challenges that were facing the Swansea Bay City Deal when it largely abandoned the digital future envisioned by Sir Terry Matthews, one of Wales’ most successful entrepreneurs, to adopt a strategy focused very much on buildings such as the Wellness Centre in Llanelli.  Having had previous experience of this approach and written various critiques of the failed Technium initiative which was also a ‘if you build they will come” approach, I did not make the comments lightly. The subsequent issues that have arisen over the future of the Wellness Village, including an ongoing police investigation, were not surprising and, as I predicted, have had an effect on the viability of other worthwhile projects. Of course, speaking such truth to power has its dangers to any commentator in academia, public life or the media and I certainly received my share of personal abuse and professional criticism from supporters of this approach during that...

As we all know, developing better skills amongst the workforce is critical to ensuring a more competitive economy. This is especially the case amongst those small to medium sized enterprises (SMEs) that are responsible for the majority of employment in the UK.  Whilst research from the Federation of Small Businesses (FSB) show that nine out of ten SMEs recognise this issue and the value of staff training, less than half are actually putting their hands in their pockets to invest in learning and development.   Why is the case?  Various studies have suggested that much of the training on offer does not consider the requirements of those entrepreneurs running SMEs especially as, unlike large firms where there are various layers of management cushioning chief executives from what is happening on the ground, entrepreneurs play a far more pivotal role in the day-to-day running of small businesses.  As a result, the founders of small businesses tend to be directly invo...

Given the growing uncertainty about the future of the UK economy, it is worth examining the opinions of those small to medium sized employers (SMEs) that are responsible for much of the growth in jobs and prosperity over the last few years. One of the best sources for this information is the annual Small Business Survey carried out by the UK Government, which was created nine years ago and surveyed over 15,000 UK small business owners and managers in 2018.  The results are fascinating and provide a useful barometer as to how the small business sector is growing despite some of economic issues that may be facing this country at a time when we will soon be leaving the European Union. First of all, the study shows that 22% of SME employers employed more people in 2018 than a year previously. This compares with 64% who employed the same number and 13% who employed fewer people. The largest proportional job growth by firm size was for medium-sized businesses, which had increased employm...

Last Thursday I was privileged to be at the brilliant Tramshed Tech accelerator in Cardiff for the launch of the latest “State of the Nation” report from Tech Nation, the UK’s network for ambitious tech-based entrepreneurs. Yet again, there were some fascinating statistics including about the situation here in Wales with the report showing that there are currently 3,605 Welsh digital tech firms employing 45,000 people and having a total turnover of over £1 billion. However, the emphasis this year was not to look inward but to examine the performance of the UK tech economy on the global stage and how our innovative companies, entrepreneurial communities and ground-breaking technologies are making an impact across the world.  And rather focusing on start-up firms that usually are at the core of most research studies into the tech sector, the report focuses on those high growth scale-up firms which currently account for 80 per cent of the £6.3bn of tech investment into UK firms in 201...

Back in 2013, I began a two-year assignment for the Welsh Government to examine the key challenges for Welsh SMEs in accessing finance, an exercise which eventually led to the creation of a new Development Bank of Wales. Since the task and finish group made its recommendations back in 2015, the environment for business has changed considerably and there has been a growing appreciation of the role that SMEs can play in growing the economy.  Understanding the environment in which SMEs operate, especially in terms of accessing finance, remains important to policymakers and that is why the recent publication of the Small Business Finance Markets report from the British Business Bank makes for some fascinating reading.  First of all, it is clear that there is an increasing flow of finance from providers to SMEs, not only in traditional debt lending but also in other forms of funding such as equity or asset finance.  But whilst there is more money available in the system, it wo...

Having worked with fast growing firms for over 20 years, I have found that one of the major barriers to the further expansion within small firms is the lack of strategic skills amongst entrepreneurs and their resistance to change. Many also fail to create a balanced management team and an organisational structure to support the delegation of decisions. Academics studying entrepreneurship have long recognised this as ‘Founder's Disease’ i.e. entrepreneurs who start up their new venture founders are unable to adapt to the needs of organisation as it grows. In some firms, this becomes such a major issue that if the founders continue to lead the business beyond the start-up phase, its performance will suffer and, in some instances, it may fail. To deal with this problem once it has been identified, the entrepreneur either has to learn a new set of skills or relinquish authority to someone else. Unfortunately, many entrepreneurs cannot or will not break old habits to learn new sk...

With the growth of the internet, increased use of social media and faster broadband speeds around the UK, most small firms now undertake an increasing amount of their business online whether it is to sell their goods or services, find new markets or undertake financial transactions with suppliers and customers. Unfortunately, many small firms think that cyber security is something that will never be an issue for them and that it is large firms that are the target of electronic criminals. However, as the UK Government's 2018 Cyber Security Breaches Survey shows whilst the directors or senior management in three-quarters (74%) of small businesses say that cyber security is a high priority, only 26 per cent have formal cyber security policies and only 19 per cent have any cyber security training. As a result, two in five small businesses (42%) identified at least one breach or attack in the last 12 months, which is no lower than in the 2017 survey. In almost one-fifth (17%) of...

On Monday, the Chancellor of the Exchequer delivered his third budget to the House of Commons and whilst it was focused very much on showing that austerity was coming to an end through increases in public spending, it was also one which firmly had an eye on improving the economic performance of UK businesses. So what were some of the highlights from the 2018 budget that Welsh firms can look on positively as we approach our exit from the European Union? The first was the confirmation that a reduction in corporation tax to 17 per cent in April 2020 would now take place. Not only is this now likely to see more sole traders incorporating but corporation tax and how it can be varied once we leave the European Union – will probably become the weapon of economic choice by the UK Government if not all goes to plan with a Brexit deal. The Welsh economy has one of the highest dependency on manufacturing of any part of the UK and therefore the plans to increase the Annual Investment Allo...

We often hear SMEs – those business employing less than 250 people - described by politicians as the ‘backbone of the economy’. Yet, there seems to be very little understanding of exactly what this means in terms of the numbers of enterprises in Wales, the turnover generated by those businesses, the people they employ and their productivity. If we examine the latest government statistics on the business population, we can see that there are some interesting differences between Wales and the UK in terms of these different variables over the last ten years. In the UK, we have seen a growth of 41 per cent in the number of enterprises over the period 2007-2017 from 4.8 million to 6.7 million.  Not surprisingly, the vast majority of these additional numbers of businesses (97 per cent) are microbusinesses i.e. those employing less than ten people. In Wales, there has been a far lower growth in the business population over the same period, with the number of enterprises only ...

In order for technology-based start-ups to scale-up successfully, it is a normal prerequisite that there is a supply of venture capital available to fund expansion. Venture capital is finance provided to companies by specialist financial institutions in the form of equity investments. Whilst it has been estimated that only 1 in 10,000 start-ups actually get access to this type of funding, those companies that do receive this type of funding make considerable contribution to innovation, productivity and competitiveness. More importantly, venture capital is seen as the main source of funding for high potential risky start-ups in key sectors such as ICT and life sciences. Increasingly, the majority of venture capital funding comes from outside the UK and there is a greater dependency today on overseas capital to fund our entrepreneurs than ever before. Given the concerns over how Brexit could affect the UK economy, last week saw a fascinating report by Beauhurst – which tracks th...