PwC releases fresh family business survey
PwC releases fresh family business survey
Family businesses must adapt faster, innovate sooner and become more professional in the way they run their operations if they are to remain successful. These are just some of the findings of the latest PwC survey of 2,378 family business executives in more than 40 countries worldwide.
The report, titled Up close and professional: the family factor, is PwC’s seventh survey of family businesses globally, this year covering more companies and markets than ever before.
Overall, this year’s survey indicates that – despite a tough economic environment, with pressures around skills shortages, innovation and governance – family firms remain dynamic and resilient. Indeed, family businesses account for 70 – 90 per cent of GDP globally, and are an effective barometer of the health of the economy.
One eye-catching finding from this year’s survey is that the need to professionalise the business is gaining ground as a key concern for family firms, driven by an almost perfect storm of competitive pressure, rising costs and global megatrends.
It scarcely registered in 2012, but this year 40 per cent of respondents agree this is a key challenge over the next five years. And it must be accompanied by an equally rigorous approach to professionalising the family.
Henrik Steinbrecher, leader of Network Middle Market says, “It’s clear that there are new challenges; the economy is a colder and harder place for the family firm, competition is more intense, price pressure is growing, and the speed of change continues to accelerate. In this climate, family businesses accept they will have to adapt faster, innovate earlier, and become far more professional in the way they run their operations.”
The findings show that in general, family businesses are in reasonably good shape, with 65 per cent reporting growth in the last 12 months, and 70 per cent expecting to grow steadily over the next five years.
The number of respondents apprehensive about their ability to recruit skilled staff in the next 12 months, however, had risen from 43 per cent in 2012 to 49 per cent today. And the proportion citing the general economic situation as a key challenge in the coming year has risen slightly from 60 per cent in 2012 to 63 per cent in 2014.
This year’s survey also shows that 68 per cent of family businesses are exporting, with overseas sales accounting for about a quarter of turnover for all respondents.
Around three quarters of those surveyed expect to be exporting within the next five years, and predict this will account for over a third of all sales.
But few businesses expect to be exporting to a significantly larger number of countries than they do now, with most tending to stick to neighbouring countries or those with the same language and similar culture.
“This suggests that they lack either the skills or confidence to break into new regions – many would probably need to hire in outside talent to bridge that gap, and they may well be missing out on new sources of growth as a result,” says Steinbrecher.
Also in the survey, a high 72 per cent of family business respondents accept they will have to adapt the way they operate externally, and organise themselves internally, to exploit the full opportunities of digital technologies and avoid being overtaken by more advanced competitors.
The 2014 PwC family business survey covers family companies with a sales turnover from more than $5 million to over $1 billion in over 40 countries. Interviews with top executives in 2,848 companies took place between April and August.
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