Increased competition has come top in the list of major challenges for family businesses across Europe.
The European Family Business Barometer from KPMG and European Family Businesses (EFB), whose UK body is the Institute for Family Business (IFB), finds 75% of family businesses across the continent are optimistic in their forecasting. This represents a jump of nearly 50% from the 54% who expressed positivity two years ago.
At 84%, even greater confidence is suggested in the UK, which may be due to the higher proportion to have grown their turnover – 79% compared to 58%.
Despite the strong performance indicators, increased competition, mentioned by 37%, (40% in the UK) has come top in the list of major challenges for family businesses across Europe.
The ‘War for Talent’ is also high on the agenda, particularly in the UK, where 56% of family business leaders referenced concern about their company’s capability in competing to recruit and retain skilled staff (33% European average). In 2013 this issue was not ranked in the top five challenges, however last year it moved to number two where it remains (number one in the UK).
Gary Deans, KPMG’s UK head of family business, commented: “It’s pleasing to see both the extent of the confidence those leading family businesses have in their prospects, and that they are backed by a positive curve in their major performance indicators.
“In light of the recent volatility across the global markets, such confidence is perhaps indicative that the long-term focus adopted by many family businesses helps owners to maintain a more balanced and pragmatic view towards short-term market ‘shocks’. Certainly, it will be interesting to see if these confidence levels are sustained over the coming months.”
Gary Deans added: “However, there is a note of caution, in that the UK data signposts increasing difficulty in securing and retaining the talent and skills family businesses need to grow.
“We recognise that family business ownership structures can make competing to recruit, select and retain exceptional individuals a particular issue. Some may need to focus on developing motivational offers for the very best employees.”
The survey also reveals that family companies are thinking about their long-term strategic future. A total of 41% of the surveyed companies are planning a strategic change in the next twelve months. Of this group, 26% plan to pass the management to the next generation and 20% plan to pass on the ownership. These figures - with the UK data being broadly in-line - are consistent with previous barometers and confirm that the drive to transfer the business to the next generation is a key business issue.
Roger Pedder, EFB President, said: “Despite the challenges facing businesses in the European Union, it is once again encouraging to see that family companies remain confident about their futures. There is still however, a persistent worry surrounding employment and the ‘war for talents’. Family businesses are demonstrating a continued commitment to creating jobs and growth in Europe; policy makers must respond in kind by improving their understanding of what this vital business sector contributes to the European economy.”
Mark Hastings, IFB Director General, added: “It is great to see that confidence, turnover and employment are all increasing in the UK’s family firms. Family business is the backbone of our economy, and the bedrock of our communities – it plays a central role in providing training, promoting entrepreneurship and investing for long term growth. Often the unsung heroes of our economy, it is time for these thriving and sustainable family businesses to start getting the recognition they deserve.”
- ENDS -
Notes to Editors:
The European Family Business Barometer is based on the responses of an online survey from 1401 questionnaires which were received from family businesses across 25 European countries; this fourth edition was open from May 1 and 5 July 2015.
Family businesses hold a strong presence in Europe (more than 14 million family businesses in EU) and continue to actively contribute to the economy - over 60 million jobs in the private sector, i.e. on average 40 - 50% of all jobs according to the EFB.
There are 3 million family businesses in the UK, 15,000 of which are medium or large enterprises. They employ 9.4 million people and generate a quarter of UK GDP.
Katy Broomhead, Corporate Communications, KPMG
T: +44 (0)161 246 4623
KPMG Press office: +44 (0)207 694 8773
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Fiona Graham, Communications Director, Institute Family Business
T: +44 (0)207 630 6250
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 12,000 partners and staff. The UK firm recorded a turnover of £1.9 billion in the year ended September 2014. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 162,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
The IFB is the UK’s family business organisation, supporting and promoting the UK family-owned business sector through events, networking, representation, thought leadership and research. Its members employ more than half a million people and have a combined turnover of more than £100billion. For more information visit www.ifb.org.uk.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.