In this third bi-annual European Family Business Barometer, European Family Businesses (EFB) and KPMG once again seek to bring an insight into the confidence levels of family businesses, the challenges affecting their everyday operations and the solutions they seek to ensure their development and sustainable growth. This time the headline message is that while the outlook is positive the pressure on profitability and the war for talent are the key changes.
It is reassuring to see that despite continuing nervousness within the European market, the family businesses surveyed are consistently confident and optimistic in their outlook for the future. There are many positive indicators and even fewer businesses are negative in their forecasts.
Six months after our previous poll, the number of those feeling confident is stable at 70% of respondents indicating that they have a positive outlook for their business for the next six months. This represents an encouraging increase from 54% twelve months ago.
Backed by their confidence, family businesses continue to achieve sustainable growth: 54% of respondents are now reporting that their turnover has increased (compared to 44% in June 2014). In addition, 48% of respondents have increased staff numbers in the last six months, a rise of 8% since June 2014. This increase is supported by the rising number of businesses confident about their capacity to expand and commitment to further investments.
While family businesses are consistently optimistic about the future there are a number of significant issues to manage. A decline in profitability continues to be the primary concern, cited by 47% of respondents, making it the most pressing challenge for the second barometer in a row. This represents an increase of 9% over the last twelve months.
In the previous editions, there were warning signs on employment and skills. This seems to be confirmed as challenge surrounding the ‘war for talent’ has been steadily rising. In this 3rd edition, it has been flagged as the second biggest challenge for respondents (42%); a jump of 6% since the last edition in June. In addition, the ‘cost of labour’ has risen rapidly to third place in the list of challenges facing businesses, with a swing of 15% to 29% in twelve months. Therefore, it is not surprising that 50% of respondents would welcome reforms in labour market regulation.
Roger Pedder, EFB President: ‘The results of this third edition show once again that family companies are growing. However, as we saw from the last edition the pressures on profitability, the worrying trend surrounding the ‘war for talents,’ and the complexity surrounding employment are still present. This should act as a signal to policy makers that urgent action is needed’.
In this third Barometer it is really encouraging to see that Family Businesses are consistently optimistic about their future despite the complex economic environment in which they operate. The research has demonstrated a steady growth curve over the last six months and respondents are actively planning new investments in the coming months. Nevertheless, they are again challenged on profitability and increasingly concerned about hiring and retaining best talents. These issues will continue to be at the top of the family business agenda as we move into 2015.
The European Family Business Barometer is based on the responses of an online survey from 878 questionnaires which were received from family businesses across 18 European countries; this third edition was open from 15 September to 20 October 2014.
Download the Third EFB-KPMG European Family Business Barometer (PDF 2.11 MB) now.