Research Shows Optimism from Family-run Businesses
Research shows that family-run businesses are optimistic for the future
According to research that was carried out with over 1,600 family-run companies in 35 countries, the majority are positive about their future – but one of the biggest worries was how the businesses will be passed on to other family members in the future.
Pricewaterhouse Coopers, who carried out the research, found that despite the recession, 95% are confident they can compete effectively with the leaders in their sector, and 60% intend to expand in the next 12 months.
They also found that 32% have seen a modest growth in their business, and 16% have reported a significant growth over the last 12 months.
However, PwC discovered that 48% of family-run businesses admitted to having no succession plan, and only 50% have decided who will take over the top job within the firm. This is despite 27% of survey respondents claiming that they expect their business to change hands within the next five years, and 53% of these companies expect the business to remain in the family.
“To ensure a smooth transition, family businesses must do some careful planning,” commented Norbert Winkeljohann of PwCΓÇÖs Network Leadership Team.
“Companies that survive a change of ownership are usually those that have developed a good plan, outlining how the succession will take place and what criteria will be used to judge when the successor is ready to take over the reins.”
As a result of the research, PwC believe that many family businesses aren’t preparing themselves enough for the future – for example, 62% donΓÇÖt have any preparations in place for possible sickness or death of a key manager.
In addition, the survey revealed that very few family-run businesses are prepared to cope with conflicts between family members. Norbert Winkeljohann says that since a similar survey carried out in 2007, there has been an increase in the percentage of family firms experiencing some form of tension.
“Having good conflict-resolution mechanisms in place is crucial to the success of a family business,” he added. “Any conflict between family members – be it over money or future leadership – will spill over into the way the business is managed and owned. If relations within the family are healthy, the business is more likely to be healthy, too.”