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European family businesses stake their future on talent and innovation

Family businesses stake their future on talent

Family businesses continue to demonstrate a high level of confidence and sustainable growth according to the European Family Business Barometer from European Family Businesses (EFB) and KPMG Enterprise.

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Family business leaders rely heavily on two key assets: talent and innovation

War for talent and political uncertainty pose greatest concerns

Family businesses are becoming more mature and business leaders are taking the necessary steps to prepare their companies for the future

The extensive pan European research found 54% of family businesses have benefitted from increases in turnover from the previous year and 83% expect further growth in the coming year. However, disparities between companies of different sizes are obvious: among large companies, 74% have increased sales against 57% among mid-sized companies, and 47% among small companies.*

Although family businesses are optimistic, there are still major challenges inhibiting their growth. The biggest concerns relate to attracting and retaining talent and political uncertainties, which were cited by 37% of respondents. The ‘war for talent’ has been steadily rising up the agenda for the last three years - in 2013 it was not even among the top five issues.

Family businesses remain clear as to what drives their success: people and innovation. The rising importance of these two success factors is highlighted by their investment intentions. Among the 73% of respondents with investment plans, 52% intend to invest in new technology and 47% on new hires and training, second and third investment priorities respectively. The biggest spending remains on core business.

Family businesses are planning for the future and place growth high on the agenda. Regardless of the chosen strategy – growing sales, tapping into new markets, or preparing to transfer the reins of the business – owners are taking steps to further professionalise their companies. They are formalising governance structures (88% of respondents have formal governance mechanisms in place); involving the next generation members in the company’s management (49%); and, when necessary, bringing in outside knowledge and expertise (79% of family businesses currently have non-family executives).

Conducted prior to the decision by the UK to leave the EU but still in the shadows of sluggish economic growth and nervousness across the European market, the Barometer indicates that despite a challenging environment, the family business community remains confident and optimistic about their outlook for the future. Although there may be a bumpy ride in the UK over the coming months and years, we expect them to keep focused on their long-term horizons and draw on some of their unique strengths to retain this positive perspective overall.

Jesus Casado, EFB Secretary General, said: “We have become accustomed to family businesses, in times of political turmoil and uncertainty, being the stabilising factor of our shared economies. Family businesses are doing their bit to create more growth and jobs. Our European leaders must do theirs by ensuring that family companies have the right framework conditions to prosper. Collectively, we must ensure that Europe remains competitive and the best place to invest and grow.”

Ken McCracken, KPMG’s Head of Family Business Consulting, commented: “It is very encouraging to see that in spite of the recent upheavals in the European market, family businesses feel confident and optimistic about their future prospects and demonstrate positive performance. Family business owners seem to have found their keys to success; they actively rely on their traditional structures and cultural strengths and are taking steps to boost their companies’ ambitions. Nevertheless, survey respondents expressed clear concerns about the intensifying ‘war for talent’, as their inability to compete for the best talent may hinder their further growth.”

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Europe has approximately 14 million family owned companies providing over 60 million jobs in the private sector, Source: European Family Businesses

*Large companies are defined as those with turnover of over €50m, mid-sized companies –with turnover €10m-€50m, small companies - with turnover of less than €10m (EU definition)

About the Barometer

The European Family Business Barometer is based on the responses of an online survey from 959 questionnaires which were received from family businesses across 23 European countries from 1st May to 30th June 2016.

About European Family Businesses (EFB)

European Family Businesses (EFB) is the federation of national associations representing long-term family owned enterprises, including small, medium-sized and larger companies. EFB represents 1 trillion euros in aggregated turnover, which is 9 per cent of European GDP. EFB’s mission is to press for policies that recognise the fundamental contribution of family businesses in Europe’s economy and create a level playing field when compared to other types of companies.

About KPMG Enterprise

Passion, it’s what drives entrepreneurs, family businesses and fast-growing companies alike. It’s also what inspires KPMG Enterprise advisers to help you drive success. You know KPMG, you might not know KPMG Enterprise. KPMG Enterprise advisers in member firms around the world are dedicated to working with businesses like yours. Whether you’re an entrepreneur looking to get started, an innovative, fast-growing company, or an established company looking to an exit, KPMG Enterprise advisers understand what is important to you and can help you navigate your challenges – no matter the size or stage of your business. You gain access to KPMG’s global resources through a single point of contact – a trusted adviser to your company. It’s a local touch with a global reach.

About KPMG

KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 155 countries and have more than 174,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.