Local
news | 28 September 2015 | KPMG Limited

Europe’s family businesses increasingly confident despite increased competition.

EFB and KPMG launch the 4th edition of the European Family Business Barometer, which seeks to measure the confidence levels of family-owned businesses across Europe.

It is refreshing to see, that family businesses which hold a strong presence in Europe (more than 14 million family businesses in EU) and account for an important part (over 60 million jobs in the private sector, i.e. on average 40 - 50% of all jobs*), continue to actively contribute to the regional economies.

Two years later, after the first European Family Business Barometer, the number of companies who are optimistic in their forecasting has reached 75%. Though the survey shows an overall confidence across businesses of all sizes, small companies are slightly less optimistic than the large ones: while 66% of small companies express a positive outlook for the future of their business, this rises to 81% among the large companies.

Although the performance indicators are positive, increased competition, mentioned by 37%, has come top in the list of major challenges for family businesses. Unsurprisingly, the ‘War for Talent’, an increasing trend over the last two years, continues to be a big influencer on future success. Family businesses are well aware that employing the right people with the right skills is key to their success and 33% of them are concerned about their company’s capability to compete to recruit and retain skilled staff. In 2013 this issue was not even ranked in the top five challenges, however last year it moved to number two where it remains. This may be a warning sign for some businesses, as difficulty to compete for the best talent may pose limitations for family businesses’ future performance.

The survey also reveals that family companies are thinking about their long-term strategic future. This year 41% of the surveyed companies are planning a strategic change in the next twelve months. Of this group, 26% plan to pass the management to the next generation and 20% plan to pass on the ownership, 1st and 3rd choice respectively in the ranking of the envisaged changes. These figures are consistent with the results of the previous editions and confirm that the drive to transfer the business to the next generation is still highly important for family businesses.

Overall, the findings of our survey reflect the rise in companies’ confidence in the future, and positive trends in all the major business performance indicators confirm improved results. With 58% of respondents reporting that their turnover has increased, 26% indicating that they have maintained turnover, and 16% of those whose turnover has decreased (half the number of two years ago), the future for the majority appears bright.

Quote from Christophe Bernard, Global Head of KPMG’s Family Business Practice:

"Nine months on from our previous Barometer, it is really pleasing to see that Family Businesses are increasingly confident in the future and demonstrate a positive curve in all major performance indicators. Backed by their confidence, these business are not passively relying on previous success and waiting for new business opportunities to come. They demonstrate strong voluntarism and ability to adapt to ever changing environment: they are actively preparing and integrating the next generation into management roles and are increasingly recognizing the need for outside expertise and talent."

The European Family Business Barometer is based on the responses of an online survey from 1401 questionnaires which were received from family businesses across 25 European countries; this fourth edition was open from May 1 and 5 July 2015.

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