Family businesses must adapt faster, innovate sooner and become more professional in the way they run their operations if they are to remain successful, according to PwC research.
A survey of over 2,000 family businesses in more than 40 countries worldwide found that these businesses are feeling the pressure of skills shortages, innovation and governance. Hence, they see the need to professionalise their business as a key concern, with 40% of respondents saying that it is a key challenge over the next five years.
In general, family businesses are in reasonably good shape, with 65% reporting growth in the past 12 months, and 70% expecting to grow steadily over the next five years. Meanwhile, 15% are seeking aggressive growth, compared with 12% in 2012. Growth ambitions are particularly strong in China (57%), the Middle East (40%) and India (40%).
But the number of respondents who are apprehensive about their ability to recruit skilled staff in the next 12 months has risen from 43% in 2012 to nearly half (49%) today. And the proportion citing the general economic situation as a key challenge in the coming year has risen slightly from 60% in 2012 to 63% in 2014.
Meanwhile, it seems that family businesses have become more hard-headed since the survey was last conducted in 2012. The most important priorities they cite are to remain in business and to improve profitability. Next come the factors that will make this happen, with the issues of family and community coming much lower. Two years ago, 70% of those questioned felt a strong sense of responsibility to support community initiatives; that number is down to 59% this year.
Commenting on the research, Henrik Steinbrecher, network middle market leader at PwC, said: “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.”
Family businesses account for between 70% and 90% global GDP globally and are an effective barometer of the health of the world’s economy.
Sally Percy is editor of The Treasurer