European Family Business Barometer 2018 | KPMG | AU
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European Family Business Barometer: How Australian businesses compare

European Family Business Barometer 2018

The release of the 2018 European Family Business Barometer shows key similarities and differences between European and Australian family businesses.

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European family business barometer

Published by KPMG Enterprise and European Family Business (EFB), the Barometer surveyed 1,576 family business executives in 26 countries across Europe.

The findings show:

  • 73 percent of family businesses in Europe are confident about the future however
  • global skills shortage, political uncertainty and a heightened regulatory environment pose challenges to growth
  • the war for talent was ranked as a top challenge facing family businesses by over 50 percent of respondents
  • 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 – down from 44 percent in 2017.

European family business: driven by a need to innovate

Most countries in Europe are positive about their future but confidence dropped from 83 percent in 2017 to 68 percent in the UK this year. Ongoing Brexit negotiations mean that UK family businesses are looking to the future cautiously. However:

  • 23 percent of European family businesses plan to expand and diversify their products to drive growth
  • 54 percent plan to expand into new markets, embrace innovative practices and new technologies, as well as investing in training and recruitment
  • 36 percent are putting overseas expansion plans on hold, as they are finding global competition and increased labour costs too daunting.

How does this compare to the Australian experience?

In the 2018 Family Business Australia Survey, the top financial objectives of family businesses, like their European counterparts, were sales and growth, profitability and profit margins, and return on investment. Of those surveyed:

  • nearly 60 percent anticipate domestic growth over the next 12 months
  • in the international market, 50 percent anticipate growth
  • when it comes to future growth, respondents indicated that the top threats are the increasing costs of doing business, changing consumer preferences and purchasing behaviours, and the entry of new competitors into the market.

It’s clear that in Australia, issues such as the rising costs of doing business, disruption and competition, the need to innovate and invest in technology, are similar to European family business concerns.

But Australia is operating from a platform of relative stability, meaning that the outlook for international expansion remains more positive. Nevertheless, according to the 2018 Survey, family enterprises still need to address a number of key issues.

Challenges for Australian family business

  • 30 percent of Australian family businesses don’t have a succession plan in place
  • 22 percent of future leaders viewed poor family communication as the number one source of conflict between generations.

Lack of planning and internal conflict appear to be the greatest barrier to success.

The Survey shows that families with a shared understanding of the future of the business and who build strong communication frameworks both within the family and the business, are more likely to succeed into the long-term.

A focus on training, mentoring and developing the next generation for leadership is absolutely critical. Governance frameworks must also be put in place to ensure the interests of the family and the business are secure for the future and understood by all involved.

If you do this, there is every reason to be optimistic – whichever continent you live in.

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