Family businesses are the ‘unsung heroes’ of global economy – PwC
Two-thirds of family businesses around the world – including 100 in Malta – have experienced sales growth this year, and more than eight in 10 believe ambitious targets for the next five years will be met, a PricewaterhouseCoopers study has found.
Research into the activities of 1,952 family business executives in more than 30 countries found 65 per cent of family businesses have grown sales compared to less than half in PwC’s last such survey in 2010. Growth was strongest in Eastern Europe, Latin America and the Middle East. Only 19 per cent saw a reduction in sales over the last year, compared with 34 per cent in 2010.
Eighty-one per cent of respondents expressed confidence in the future, saying they were anticipating “steady or quick and aggressive” growth in the next five years.
Family firms’ positive outlook belies two major challenges – an increasing shortage in skilled staff and overcoming hurdles related to succession planning.
Forty-three per cent of family-owned businesses said recruiting the right skills sets had become more problematic than two years ago (38 per cent). Nearly 60 per cent are concerned the talent shortage will persist over the next five years and nearly half are aware talent retention will be a challenge in the medium-term.
The survey findings dispel any (wrongly held) impression that Maltese family businesses lag behind their counterparts in other parts of the world in governance matters. Only half the firms surveyed have a shareholders’ agreement in place and just over two in 10 have no formal procedures to deal with conflict. Family politics and the need to attract non-family team members are the major issues businesses have to overcome as they plan future leadership and management.
Externally, market conditions like government policy and regulation is a major issue for family firms in Greece (64 per cent), Russia (49 per cent), and the Middle East (46 per cent).
Sixty-six per cent see the general economic situation as a key challenge to their business in the next five years.
Structure is an important advantage to family businesses – they believe they are more agile, flexible, and are able to ensure business continuity and keep a longer term perspective.
They are fully aware of their ability to create jobs, bring stability to a balanced economy and leverage their entrepreneurial nature – 81 per cent say they fight hard to keep staff, even in hard times, and are committed to employment and the community.
Malta’s family firms join their counterparts in Austria, Canada, Hong Kong, India, Mexico, the Middle East, Singapore, Sweden, Switzerland, and Turkey in believing their governments recognise their importance.
But most firms worldwide say authorities could be more supportive through improved tax regimes for succession processes, incentives for family business start-ups, specific tax relief, training, mentoring and support for research and development.
“Our survey confirms once again that the issues faced by family business are not dissimilar to those faced in other countries,” PwC Malta Territory senior partner Kevin Valenzia said. “The majority are aiming for growth, with innovation and succession being their key challenges. The survey results also demonstrate that family-owned businesses continue to play a key role in local economic growth and stability.”
The survey, which was conducted between June 7 and September 18, covered family companies with a sales turnover of more that $5 million (€3.86m) in more than 30 countries, including Malta.