The release of the latest 2018 European Family Business Barometer outlines key similarities and differences between European and Australian family businesses.
The Barometer surveyed 1576 family business executives in 26 countries across Europe. The findings show that:
At the same time, family businesses acknowledge they must become more agile, innovate faster and attract top talent to remain competitive. Almost one quarter (23 per cent) plan to expand and diversify their products to drive future growth and more than half (54 per cent) plan to expand into new markets. One of the key strategies is embracing innovative practices and new technologies, as well as investing in training and recruitment.
As European family businesses prepare to do business on the world stage in an increasingly interconnected world, they find themselves going head-to-head with global competition and have to factor this into their growth and expansion plans. Some are finding this too daunting. This is one reason, along with the war for talent and the increased costs of labour (36 per cent), why overseas expansion has been put on hold.
How does this compare to the Australian experience? In the 2018 KPMG Enterprise Family Business Australia Survey, the top financial objectives of family businesses, like their European counterparts, were sales and growth, profitability and profit margins, and return on investment. Of those surveyed:
It’s clear that in Australia, issues such as the rising costs of doing business, the need to innovate and invest in technology, are similar to European family business concerns. But Australia is operating from a platform of relative stability, meaning that the outlook for international expansion remains more positive.
Nor is the war for talent as much of an issue. What needs to be addressed, however, are plans for transition, and one-third of Australian family businesses do not have a succession plan in place, according to the Survey.
Such plans are made more complex when 22 per cent of future leaders viewed poor family communication as the number one source of conflict between generations. This seems to be the greatest barrier to success and the ongoing health of the family business.
The Survey shows that families with a shared understanding of the future of the business and who build strong communication frameworks both within the family and the business, are more likely to succeed into the long-term.
Focusing on training, mentoring and developing the next generation to be prepared for leadership is absolutely critical. Governance frameworks for the future must also be put in place to ensure the interests of the family and the business are secure and understood by all involved.
There is every reason to be optimistic – whichever continent you live in.
Bill Noye and Dom Pelligana, Partners, KPMG Enterprise