The report brings insights on the confidence levels of family businesses across Europe, the challenges they face and the changes they need to overcome.
European Family Businesses (EFB) and KPMG launched the fourth edition of the European Family Business Barometer, which seeks to measure the confidence levels of family-owned businesses across Europe. This year, the clear message is that family businesses continue to be highly optimistic about the future and despite the challenges, they are focused on pursuing new business opportunities in order to continue growing their business.
It is refreshing to see that family businesses, which hold a strong presence in Europe (more than 14 million family businesses in EU) and account for an important part of employment(over 60 million jobs in the private sector, i.e. on average 40 - 50% of all jobs*), continue to actively contribute to their regional economies.
Two years after the release of the first European Family Business Barometer, the number of companies who are optimistic in their forecasting has reached 75%. Though the survey shows an overall confidence across businesses of all sizes, small companies are slightly less optimistic than the large ones: while 66% of small companies express a positive outlook for the future of their business, this rises to 81% among large companies.
Although the performance indicators are positive, increased competition (37%) is now leading the list of major challenges for family businesses. Unsurprisingly, the ‘War for Talent’, an increasing trend over the last two years, continues to be a big influence on future success. Family businesses are well aware that employing the right people with the right skills is key to their success, and 33% of them are concerned about their company’s capability to compete, recruit and retain skilled staff. In 2013 this issue was not even ranked in the top five challenges, however last year it moved to number two where it remains. This may be a warning sign for some businesses, as difficulty to compete for the best talent may pose limitations for the future performance of family businesses’.
The survey also reveals that family businesses are thinking about their long-term strategic future. This year 41% of the surveyed companies are planning a strategic change in the next twelve months; of this group, 26% plan to pass their management to the next generation and 20% plan to pass on their ownership to the next generation, 1st and 3rd choice respectively in the ranking of envisioned changes. These figures are consistent with the results of the previous editions and confirm that the drive to transfer the business to the next generation is still highly important for family businesses.
Overall, the findings of our survey reflect the rise in family businesses confidence in the future, and the positive trends in all of the major business performance indicators confirm these improved results. With 58% of respondents reporting that their turnover has increased, 26% indicating that they have maintained turnover, and only 16% reporting decreased turnover(half the number of two years ago), the future for the majority appears bright.
*European Family Businesses - The European Family Business Barometer is based on the responses of an online survey from over 1400 questionnaires, which were received from family businesses across 25 European countries; this fourth edition took place from May 1st to July 5th, 2015.