Global perspectives for family businesses
Family businesses around the world share optimism about future business prospects
Surveying almost 400 executives of family-owned businesses in 24 countries including Ireland, the majority of respondents expect revenue, profits, and capital investments to increase in the year ahead. Additionally, 48 percent expect to hire more full-time employees. Despite these expectations, 53 percent of respondents perceive a greater level of uncertainty around their future business prospects.
We found that executives in family businesses around the globe share the same optimism as their counterparts in non-family private companies, who we also surveyed:
- Two-thirds of family business expect increased revenues and profit over the next 12 months. Forty-two percent even predict an increase in revenues of 26 percent or more.
- Forty-two percent of family businesses expect to acquire another company over the coming 12 months.
- Forty-eight percent expect to hire more full-time employees.
Family businesses need to maintain a balance between their business goals (such as growth, innovation and recruiting talented staff) and their family goals, such as maintaining family values and protecting the family wealth. We might expect this to result in different views and approaches, compared to non-family private businesses. Our study found differences in their perceptions of risk, financing growth and workforce:
- Family businesses rely on internal sources for funding growth. They are not keen on engaging with private equity or selling equity to the stock market.
- Unlike non-family private companies, they do not perceive economic uncertainty or geopolitical factors as the major risks to growth, given the resilience of their business in turbulent times.
- Family businesses will invest slightly less in leadership development than the other private companies in our survey.
The difference we found regarding the workforce is remarkable. Family businesses are proud to say that their workforce is very loyal to the company and the family. This is a huge advantage, although maintaining strong positive attitudes will probably call for more investment in future than ever before.
Even so, family businesses need to consider a number of tough questions:
- How to deal with business leaders, both family members and non-family?
- How to retain employees, especially non-family senior managers, if giving them equity is not an option?
- How to grow via acquisitions, instead of being taken over?
- How to finance growth, and whether to rely on internal funding or whether to seek external funding?
- How to anticipate disruption, and benefit from it?
- What will be the impact of emerging technologies, not only on the business but also on the family system?