Global Family Business Survey 2019
Many family businesses prioritise continuing family legacy and traditions - but lack a plan for succession
Family-owned businesses are known in general to have a long-term orientation. However, a new global Deloitte survey shows that only four out of ten consider themselves ready for succession.
Most family business executives have a long-term vision for their business. They want to keep the business in the family, pass it on to the next generation, safeguard and grow their capital, and preserve their family traditions.
However, according to Deloitte’s fifth annual Global Family Business Survey, many family businesses lack a clear plan for succession.
The survey explores the views of 791 executives of family-owned businesses from 58 countries around the world on topics such as ownership, governance, succession and strategy. More than one-half of the executives said their business was “ready” for the future when it comes to ownership, governance and strategy - but only 41 percent said their business was ready for the future in terms of succession planning.
While a strong succession plan can help align short- and long-term goals, many family businesses have not invested in the time to create formal plans. An alarming result, considering that fewer than 30 per cent of family businesses survive into the third generation of family ownership.
Connecting the present with the future
Today, family businesses are operating in unstable market conditions with changing consumer behaviour. They face issues arising from climate changes, geopolitical volatility and environmental degradation. Therefore, the executives tend to focus their strategy on a two-to-five-year time horizon, and often take a reactive approach to events as they happen.
No doubt, it is challenging to balance long-term objectives such as keeping the business in the family and preserving family capital with short-term challenges arising from disruption, digitalisation and globalisation. One way to connect the present to the future is to follow a zoom in/zoom out approach to strategy development. This approach is developed by Deloitte’s Center for the Edge, and it calls for leaders to envision what the market will look like in 10 to 20 years – and then to translate this picture into a very few select initiatives to pursue for the next six to 12 months.
Families that can appropriately define both their 10- to 20-year aspirations and their six to 12-month initiatives – and maintain a clear line of sight from the one to the other – will stand a far greater chance of staying ahead of the game for years to come.
Learn more about the zoom in/zoom out approach and take a deep dive into the results of the survey by downloading the report.