European Family Business Barometer: Embracing Innovation (Seventh Edition)
European Family Business Barometer (Seventh Edition)
The European Family Business Barometer reveals that family businesses continue to build on the momentum of past strong economic growth.
KPMG Enterprise European Family Business Barometer 2018.
Our annual Barometer, a joint-partnership between KPMG Private Enterprise and European Family Businesses (EFB), shows Europe’s family businesses are confident about the future but must become more agile, innovate faster and attract top talent to remain competitive and continue to grow. Now in its seventh edition, the survey received more than 1,500 responses from family business owners in 26 countries across Europe and reveals that family businesses continue to build on the momentum of past strong economic growth.
Europe’s family businesses are planning for growth. Almost one quarter (23 percent) plan to expand and diversify their products to drive future growth and more than half (54 percent) plan to expand into new markets. One of the key strategies for growth is embracing innovation. Respondents are capitalizing on past growth and reinvesting profits into the business. The majority (86 percent) are investing in the core business, 83 percent are investing in innovation and technology, and 81 percent are investing in recruitment and training. This is also a direct response to the top two challenges facing respondents: the skills shortage (53 percent) and the rising cost of labor (36 percent).
Several highlights emerged throughout the reports analysis, including:
- 73 percent of respondents report that they are confident or very confident in their family business’ economic prospects over the next twelve months. About one in five (19.5 percent) are neutral and 6.04 percent are negative or very negative about the future.
- While overall confidence is up across Europe, the UK was a notable exception, with confidence dropping from 83 percent in 2017 to 68 percent this year. With Brexit negotiations ongoing, UK family businesses are looking to the future with caution.
- 64 percent of total respondents reported increased turnover over the past year. Only 11 percent of respondents reported decreased turnover in the past twelve months.
- Improving profitability (49 percent); increasing turnover (38 percent); and attracting new talent (27 percent) are the top three priorities for the next two years.
- The war for talent was ranked as a top challenge facing family businesses. This year 53 percent of respondents identified the war for talent as one of their top three concerns. This compares to 43 percent in 2017 and 37 percent in 2016. Other top challenges this year included the increased cost of labor (36 percent) and political uncertainty (36 percent).
- International expansion is being postponed. In this year’s survey, only 36 percent of respondents said they had increased their activities abroad over the past year – compared with 44 percent in 2017 and 65 percent in 2016.
Read the final report to gain access to the full analysis of the results and trends identified from the business families that completed the report.