Australian and European family businesses: same goals, differing challenges
It’s not surprising that whilst most countries in Europe are positive about their future, in the UK, confidence dropped from 83 percent in 2017 to 68 percent this year. With Brexit negotiations ongoing, UK family businesses are looking to the future with caution.
At the same time, family businesses acknowledge they must become more agile, innovate faster and attract top talent to remain competitive. Almost one quarter plan to expand and diversify their products to drive future growth and more than half plan to expand into new markets.
One of their key strategies for growth is embracing innovative practices and new technologies, as well as investing in training and recruitment.
These are some of the key findings of the latest 2018 European Family Business Barometer.
As European family businesses prepare to do business on the world stage in an increasingly inter-connected world, they find themselves going head-to-head with global competition and have to factor this into their growth and expansion plans. Some are finding this too daunting. This is one reason, along with the increasingly difficult search for talent and the increased costs of labour (36 percent), why overseas expansion has been put on hold.
How does this compare to the Australian experience?
In the 2018 KPMG Enterprise- Family Business Australia Survey, the top financial objectives of family businesses, like their European counterparts, were sales and growth, profitability and profit margins, and return on investment. Of those surveyed over the next 12 months, nearly 60 percent anticipated domestic growth compared to 50 percent international over the next 12 months.
The top threats to growth were the increasing costs of doing business, changing consumer preferences and purchasing behaviours, and the entry of new competitors into the market. It’s clear that in Australia, issues such as the rising costs of doing business, the need to innovate and invest in technology, are similar to European family business concerns.
But Australia is operating from a platform of relative stability where the outlook for international expansion remains more positive.
Nor is the ‘war for talent’ as much of an issue. What needs to be addressed, however, are plans for transition with only two thirds of surveyed Australian family businesses having a succession plan in place.
Such plans are made more complex when 22 percent of future leaders viewed poor family communication as the number one source of conflict between generations. This seems to be the greatest barrier to success and the ongoing health of the family business.
The Australian survey shows that families with a shared understanding of the future of the business and who build strong communication frameworks both within the family and the business, are more likely to succeed into the long-term.
Focusing on training, mentoring and developing the next generation for leadership is absolutely critical. Governance frameworks must also be put in place to ensure the interests of the family and the business are secure and understood by all involved.
But despite all the uncertainty overall, 73 percent of European businesses are optimistic about the future. There is every reason to be – whatever continent you live in.
The 2018 European Family Business Barometer, outlines key similarities and differences between European and Australian family businesses.
Published by KPMG Enterprise and European Family Business (EFB), the Barometer surveyed 1,576 family business executives in 26 countries across Europe.