Australian family businesses are optimistic about their future growth prospects with 78 percent reporting a positive outlook according to our latest sounding on this important sector. It’s an interesting finding as we look ahead to 2016 since the health of family businesses can often be a telling barometer on the broader national marketplace.
This year’s Family Business Survey 2015 (692.7, undertaken jointly by KPMG and Family Business Australia, is out today. Embracing technology and innovation is one of its key themes – a significant development since the last survey was published in 2013.
Back then, family businesses were concerned about weathering economic uncertainty. Today, they are focused on keeping up with the disruptive effects of technology and balancing business interests with those of the families who manage them.
A positive outlook is key to success, as is being open to change. This openness, together with strong entrepreneurial characteristics and diversity in leadership were listed as some of the secrets of successful family businesses.
Notably, the top business objective for family businesses this year was product and service quality (# 2 in 2013), rated ahead of cash flow (#2) and net profit (#3). A focus on quality and customers is a reminder to anyone in business, family or otherwise, that without customers and a product or service relevant to them, the business can be challenged.
Family businesses are embracing disruptive technologies and keeping up with rapid change; they are also willing to take risks and delegate authority while proactively seeking new ideas and opportunities. These are the attributes that, arguably, all businesses need to remain competitive regardless of their size. The recognition amongst Australia’s family businesses that technology can be harnessed to create and enhance a competitive advantage is very positive.
More than 20 percent of respondents to the 2015 Survey recognised that technology investment was a cost; at the same time, those family businesses with an entrepreneurial culture were outperforming others.
Family businesses believe technological change is creating disruptions in the way business is done, but in a positive way. It is improving the way they manage their business, their internal business processes and the way they are interacting with customers.
There are identifiable characteristics of high performing family businesses including an entrepreneurial culture and business management practices that focus what’s happening outside the business.
Balancing of family and business issues remains to be the biggest challenge.
Governance mechanisms are evolving, 52 percent of family businesses have a formal board (up from 39 percent in 2011), and 31 percent have a family constitution (up from 20 percent in 2011).
Although there is still work to be done in exit/success preparation, family businesses are overall much more prepared than in 2013.
CEO’s believe their successor needs to work on their financial management, strategic planning and leadership/management skills.