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High Confidence Levels In European Family Businesses

9th September 2015 Paul Andrews

Increased competition fails to dent high confidence levels in family businesses across the UK and Europe

  • Three quarters of family business leaders in Europe are optimistic; up nearly 50% on two years ago
  • Concerns centre on employment and attracting the best people

The European Family Business Barometer from KPMG and European Family Businesses (EFB)  finds 75% of family businesses across the continent are optimistic in their forecasting. This represents a jump of nearly 50% from the 54% who expressed positivity two years ago. 

At 84%, even greater confidence is suggested in the UK, which may be due to the higher proportion to have grown their turnover – 79% compared to 58%.

Despite the strong performance indicators, increased competition, mentioned by 37%, (40% in the UK) has come top in the list of major challenges for family businesses across Europe. 

The ‘War for Talent’ is also high on the agenda, particularly in the UK, where 56% of family business leaders referenced concern about their company’s capability in competing to recruit and retain skilled staff (33% European average). In 2013 this issue was not ranked in the top five challenges, however last year it moved to number two where it remains (number one in the UK).  

Gary Deans, KPMG’s UK head of family business, commented “It’s pleasing to see both the extent of the confidence those leading family businesses have in their prospects, and that they are backed by a positive curve in their major performance indicators."

“In light of the recent volatility across the global markets, such confidence is perhaps indicative that the long-term focus adopted by many family businesses helps owners to maintain a more balanced and pragmatic view towards short-term market ‘shocks’. Certainly, it will be interesting to see if these confidence levels are sustained over the coming months.”

Gary added: “However, there is a note of caution, in that the UK data signposts increasing difficulty in securing and retaining the talent and skills family businesses need to grow." 

“We recognise that family business ownership structures can make competing to recruit, select and retain exceptional individuals a particular issue. Some may need to focus on developing motivational offers for the very best employees.”

The survey also reveals that family companies are thinking about their long-term strategic future.  A total of 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. These figures - with the UK data being broadly in-line - are consistent with previous barometers and confirm that the drive to transfer the business to the next generation is a key business issue.

Roger Pedder, EFB President, said: “Despite the challenges facing businesses in the European Union, it is once again encouraging to see that family companies remain confident about their futures. There is still however, a persistent worry surrounding employment and the ‘war for talents’. Family businesses are demonstrating a continued commitment to creating jobs and growth in Europe; policy makers must respond in kind by improving their understanding of what this vital business sector contributes to the European economy.”

Download a copy of the research report here

 

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