Family businesses in the Midlands should consider welcoming ‘outsiders’ into the fold to maintain a competitive advantage in a time of rapid economic growth in the region, according to a specialist at law firm Shakespeares.

The latest research from Families in Business has revealed that 70 per cent of family businesses in the UK admit to having no formal succession plan in place and rely solely on members of the family to pick up the baton.

David Stevenson, commercial services group head and corporate partner at Shakespeares, said: “Succession planning for many family businesses can be complex.

“As ever, planning pays dividends and finding the right person shouldn’t be rushed. In depth analysis of what the business truly needs should come before anyone is tipped to take on the role.

“A key consideration when identifying the next generation leader should be where the business is heading and identifying future emerging markets to penetrate.

“For example, with economists predicting continuing growth in the region’s export industry, family businesses with limited knowledge of this area, should consider appointing someone with the relevant experience and market knowledge.

“It is a strength to approach succession decisions with absolute objectivity and this includes any decision to bring in outside management. It should be considered a major compliment when external talent want to join the family business.”

Bringing in external expertise does not mean a family has to lose control of the business, according to Mr Stevenson.

He stressed options can be found to help strike a balance between rewarding non-family members, while keeping majority ownership within the family.

He added: “Keeping control within the family is a natural concern for owners who are reviewing their succession options but this is not a reason to put off such decision making.

“It is possible to structure incentives and share capital in a way that works for everyone. Share options are a crucial way to give vital non-family members capital and can be adapted to suit the needs of the business as it evolves.”