Innovation & Recruitment Are Top Priority
29th October 2018 Paul Andrews
Innovation and attracting new talent are top priorities for UK family businesses according to the KPMG Enterprise European Family Business Barometer 2018
- 68 percent of family businesses in the UK are confident about the future
- 79 percent of UK family businesses’ strategic plans include investment in innovation and new technology
- Global skills shortage and political uncertainty pose challenges
Europe’s family businesses are confident about the future but must become more agile, innovate faster and attract and retain top talent in order to remain competitive and to continue their growth.
While confidence among family businesses remains strong, it has fallen in the UK from last year to 68 percent, with half (53 percent) citing political uncertainties as a major concern. These are among the key findings of the seventh annual European Family Business Barometer which surveyed 1,576 owners, next generation and senior leaders of family businesses in 26 countries across Europe, published by KPMG Enterprise and European Family Business (EFB).
- 68 percent of UK respondents report that they are confident or very confident in their family business’ economic prospects over the next twelve months.
- While overall confidence is up across Europe, the UK was a notable exception, with confidence dropping from 83 percent in 2017 to 68 percent this year. Despite Brexit negotiations ongoing in the backdrop, many UK family businesses continue to remain confident but are looking to the future carefully.
- Improving profitability (67 percent); increasing turnover (36 percent); and attracting new talent (23 percent) are the top three priorities for UK family businesses over the next two years.
- The increased cost of labour (56 percent); political uncertainty (53 percent); and war for talent (44 percent) are the top three concerns for UK family businesses.
- International expansion is being postponed. 42 percent have postponde international expansion and have deprioritised overseas activity for the next 12 months.
Investing in innovation and people to fuel growth
Europe’s family businesses are planning for growth. One of the key strategies is embracing innovation. Respondents are capitalising on past growth and reinvesting profits into the business. The majority (89 percent) are investing in the core business, 79 percent are investing in innovation and technology, and 88 percent are investing in recruitment and training. This is also a direct response to the top two challenges facing respondents: the skills shortage (44 percent) and the rising cost of labour (56 percent).
Tom McGinness, Head of Family Business, KPMG Enterprise in the UK, said: “Family businesses are placing technology and innovation at the heart of their strategy. Confidence remains high but has suffered as a result of economic uncertainty, which makes having a contingency plan in place and being agile to change essential for the health of a business."
“By taking a wait-and-see approach to international expansion and increasing focus on improving technological capabilities, firms have measures in place to help mitigate the headwinds likely to be felt as a result of Brexit. What they need now is better access to skilled people to help make this happen."
“While businesses of all types are facing challenges, the entrepreneurial success of family businesses is often overlooked. To have one successful business within a family is already an achievement - but we’re seeing something special when success spans over four or five generations. Family businesses know how to endure. They’ve weathered generations of economic ups and downs, and by turning their heads to technology and innovation in more uncertain times, they’re staying true to form - diversifying and changing course to keep ahead of the competition.”
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