Family firms in Europe staking their future on talent and innovation

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European Family Businesses (EFB) and KPMG Enterprise launch the 5th edition of the European Family Business Barometer, which seeks to measure the confidence levels of family-owned businessesacross Europe.

Family businesses in the European continent prove once again to be successful and resilient. This important market (Europe has approximately 14 million family owned companies providing over 60 million jobs in the private sector, Source: European Family Businesses) continues to demonstrate a high level of confidence and sustainable growth: 54 percent of surveyed family businesses report an increase in turnover in the previous year; 83 percent expect further growth in the coming year. However, disparities between companies of different sizes are obvious: among large companies, 74 percent have increased sales against 57 percent among mid-sized companies, and 47 percent among small companies.*

Although family businesses are optimistic, there are still major challenges inhibiting their growth. The biggest concerns this year related to attracting and retaining talent and political uncertainties, both cited by 37 percent of respondents. The ‘war for talent’ has been steadily rising for the last 3 years (in 2013 it was not even among the top five), now reaching first place. A warning sign as difficulty to compete for the best talent places pressure on family businesses and may impede their further growth.

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Family businesses remain clear as to what drives their success: people and innovation. The rising importance of these two success factors is reflected in their high rankings in the list of priorities, as well as in sufficient investment allocations. Among 73 percent of respondents including investments in their strategy, 52 percent plan to invest in new technology and 47 percent in new hires and training, second and third investment priorities respectively. The biggest spending remains on core business.

Planning for the future

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 – business owners are taking steps to further professionalize their companies. They are formalizing governance structures (88 percent of respondents have already formal governance mechanisms in place), involving the next generation members in the company’s management (49 percent), and, when necessary, bringing in outside knowledge and expertise (79 percent of family businesses currently have non-family executives).

Overall, the Barometer indicates that despite the sluggish economic growth and recent nervousness within the European market, the family business community remains confident and optimistic about their outlook for the future.

As we have become accustomed to, family businesses in times of political turmoil and uncertainty are the stabilizing factor to 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.

  • Jesus Casado, EFB Secretary General
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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 the traditional structures and cultural strengths and are taking steps to boost their companies professionalization. Nevertheless, surveyrespondents expressed clear concerns about the intensifying war for talent, as their inability to compete for thebest talent may hinder their further growth.

  • Christophe Bernard, Global Head of KPMGs Family Business Practice

*Large companies are defined as those with turnover greater than €50million, mid-sized companies have turnover between €10m-€50m and small companies have 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 1 May to 30 June 2016.

About European Family Businesses (EFB)

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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. – PRNewswire

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