Editorial

A running scaremongering tactic used in the run-up to the referendum on EU membership was the negative impact which, according to Labour, membership was expected to have on a string of Maltese firms.

The irony was that in a good number of cases the firms themselves had come out rebutting in the strongest terms possible Labour's negative forecasts, arguing that they had prepared themselves well enough for membership and that they stood better growth prospects inside the EU than outside.

In fact, a good number of firms had been undergoing a restructuring process for a good number of years. Others have lagged behind, continuing to rely mainly on sales on the local market. These firms have to be wise enough now to see how they are going to fit in in the new scenario.

As in so many other economies throughout the world, small firms play a significant role in the island's economy. So, it is important for them to charter their course wisely if they want to remain in business and flourish.

A Grant Thornton survey on family businesses gives an interesting insight into the operators' fears and expectations. Owner-manager businesses account for an estimated 70 to 80 per cent of businesses worldwide, according to the Family Business Network, the worldwide association for families in business. They account for more than 50 per cent of all employment and contribute between 50 to 75 per cent of the gross national product of the countries in which they operate.

A highly significant fact is that in many countries, family businesses outperform other companies. Yet, despite their importance, only 24 per cent of family businesses survive to the second generation and less than 10 per cent make it to the third.

What is the situation in Malta in this regard? Well, according to the Grant Thornton survey, 73 per cent of respondents are concerned with what to do if their children do not perform well in the business, with 41 per cent having serious worries about the issue.

No fewer than seventy per cent are concerned about how to finance growth but still retain control; 25 per cent consider this to be a major worry.

Another interesting outcome is that over business growth and development. While one would expect that business growth would be a main goal of any entrepreneur, it is surprising to see that only 15 per cent of Maltese owner-managers are seriously concerned with this issue.

Quite a good number of family firms in Malta have made the grade and expanded their operations to a point that they even managed to break out into export trade. Some have managed to do this successfully, but for various reasons, including increased competition, others are slower in grasping new opportunities.

One sector that has been showing the way of how to grasp new opportunities, for example, is that making furniture, with a number joining forces in order to win contracts which they would not have been able to win on their own. Exploiting such opportunities requires expertise and a determination to succeed.

Government can tangibly give a helping hand to small firms by ensuring that it reduces unnecessary costs to them and by further cutting red-tape and bureaucracy in matters that concern them directly.