(EFB) and KPMG have once again joined forces to bring an insight into the confidence levels of family businesses, identifying the opportunities and challenges affecting their operations in the short, medium, and long term. This second collaboration has provided an insight into the confidence of the family business communities across Europe, and it is refreshing to see whilst the economic landscape has been difficult, family businesses have remained confident and continued to contribute to the regional economies.
Despite the latest Eurozone figures predicting limited growth figures, prospects for family businesses are encouraging.
Six months on from the last Barometer and it is reassuring to note that family businesses are increasingly confident about their outlook for the future. The key message from this edition is that family businesses have renewed confidence in markets and their ability to seize and fund future opportunities. In addition, family businesses appear to be increasingly driven by retaining control of their future growth strategy as well as willing to invest their profits for long term reward. Family businesses have also expressed the value of having good governance structures and communication between generations.
There has been a noticeable increase in the positive indicators with respect to increasing or maintaining both turnover and staff numbers; the percentage of businesses signaling a decrease in turnover and staff numbers reducing from 31% to 24% and 23% to 11%, respectively. Also with an increase in respondents willing to state their view as positive, as opposed to neutral, all the signs point to returning market confidence.
Despite the high levels of confidence, family businesses have emerging concerns. The second edition of the EFB – KPMG survey indicates that the decline in profitability has increased as an issue with 49% of respondents (compared to 38% in 2013) classifying it as their biggest challenge. Although the survey shows that doing business internationally can be extremely beneficial for family owned companies, many family businesses show a lack of movement regarding their international development.
“War for talent” also continues to be a major influence on future success. It has become an increasing trend across the last two Barometers. The warning signs are that attracting the right people with the right skills is becoming an increasing challenge and one which may require intervention if we are to mitigate it having a negative impact on the future of family businesses.
‘The results of this second edition reinforce the assertion that family companies are a stable and responsible platform for growth in Europe. We must not ignore the other results from the Barometer, namely the challenges that remain. The pressures on profitability and the worrying trend surrounding the ‘war for talents’ is something that must be monitored and mitigated to ensure the continued success of family businesses. ’ – Roger Pedder, EFB President
‘Six months on from our first Barometer, it is really pleasing to see that Family Businesses are becoming increasingly confident in their future. Nevertheless, they express a clear concern on profitability which may balance their positive feelings. This is a key point to keep a close eye on in the near future.’ – Christophe Bernard, Global Head of KPMG’s Family Business Practice
Family businesses are not only coping magnificently with the current economic situation but are also taking advantage of opportunities for continued growth, investment and ultimately success. However great growth opportunities remain, not only regarding further investments in domestic markets but also through international expansion.
The European Family Business Barometer is based on the results of an online survey from 710 completed questionnaires which were received from EFB Members across 18 European countries; the second edition was open from 31 March 2014 to 4 May 2014. To measure the changing issues facing family businesses this survey is conducted twice a year.
The next Barometer results will be published in December 2014.
We hope you enjoy reading the second edition of our survey which we hope has, and will, lead to a better understanding of this crucial but often unreported part of Europe’s economy.