A WIDENING generation gap means Scottish family businesses face a bigger challenge than ever in securing succession, according to a report from PwC.

Family businesses across Scotland support almost one million jobs and generate around 45% of Scottish output, says Caroline Roxburgh, head of private business at PwC in Scotland. "We know that entrepreneurial family businesses plan to be in it for the long haul. However, without effective planning, the transition from one generation to the other can put a spanner in the works, potentially creating division within a family business. The pace of change in the global marketplace, responses to new technology, demographic shifts and climate change, mean the world is a very different place since the current generation of family business leaders took over."

PwC says only 1% of UK family businesses are in their sixth generation, such as Highland dress firm Kinloch Anderson founded in 1868. Deirdre Kinloch Anderson, married to fifth generation managing director Douglas, said: "The next generation are the best for modern technology. Everything changes so fast but the stimulus and excitement of change is what motivates them. Most family tensions arise over money, when the shares get spread out over the family who may want to take their money out and then begin squabbling. We're not going to have that." Susie Simpson, tax and private business director at PwC, said: "The firms that manage succession well are those that plan many years ahead, ideally, five to seven years in advance, and continually have sensible conversations that address roles, responsibilities, and timings."

lA Barclays Business Banking report found families choosing to own a business together is on the up and will rise from 2.42m to 2.65m by 2018.