Putting family ties at the heart of the economy
I’m willing to bet that the statistic that 92 per cent of all private sector companies in Scotland are family businesses will come as a bit of a surprise to you? Even as a family business owner myself, I was a little taken aback.
The figure comes from research by the Institute for Family Business, which also suggests that family firms generate over a quarter of UK GDP and employ around nine and a half million people. Family businesses in Scotland range from the tiny husband-and-wife partnership run from a spare bedroom to major league employers, such as motor retailer Arnold Clark, and Sir Willie Haughey’s City Facilities Management, which supports more than 12,000 jobs. My own family’s business, Rearo Laminates, ranks somewhere in the middle, with a £10 million turnover.
That family businesses account for such a high percentage of Scotland’s companies can be explained by the fact that, on average, they last much longer than non-family firms, because they are more resilient to such factors as economic downturns. Part of that resilience is because they often carry less debt. Stats also show that family firms are better at retaining staff.
So while it’s widely cited that more than half of new businesses fail within the first five years, most family businesses last a generation – at least 25 years. Rearo Laminates was incorporated 26 years ago, with roots stretching even further back. The secret to our longevity is a bit of a common theme in family business – steady, sustainable growth fuelled by continuous innovation and a willingness to diversify.
My father, Jim, set up his first business distributing Calor Gas in Shetland after he moved there in the 1970s, but soon realised that the islands’ sparse population would limit opportunities to grow. In the early 1980s, when the government began to sell off council houses, he spotted a business opportunity, realising that people would want to spend money renovating the homes they now owned. So he opened a kitchen and bathroom studio in Dunfermline, which his brother-in-law, Jim Smart ran.
In 1987 the studio became a distributor for Formica wall panels and worktops, taking the business down another road. My brother Jimmy joined the business in 1989, and in 1991 Rearo Laminates was established. The business set up a manufacturing facility in Glasgow so they could make laminate worktops and wall panelling, as well as supply them. When I joined Rearo in 1992, we had eight staff. We have grown steadily since then to a company with almost 100 employees, adding further over-the-counter and distribution premises in Inverness, Rosyth, Ayr, Gateshead and Newport. We’ve now got 60,000 sq ft of manufacturing space in Govan and have plans to expand further there.
Like many established businesses, we have had to continually think ahead and create new products, brand ranges and services in order to sustain our growth. We want to continue to grow sustainably, by getting involved in larger construction projects in sectors such as hotels, restaurants and social housing.
Given the longevity and success of family businesses, it is clear to me that nurturing family entrepreneurship should be a priority for the Scottish Government and local enterprise organisations. We may not always be the fastest growing or coolest businesses – which tend to attract investors who are looking for quick returns – but we are a stable, reliable part of the Scottish economy, providing vital employment, often in rural areas. And most of us are committed to our local communities, taking corporate social responsibility seriously. I hope to be able to pass on a thriving company to my children, if they wish to join the family business. Perhaps that drive to leave something successful behind is another reason for the enduring success of the many family businesses that I believe are the engine room of Scotland’s economy. Graham Mercer, managing director, Rearo Laminates Ltd
Part of that resilience
is because they often carry
less debt