Family Businesses lie at the heart of the European economy, a fact that is often overlooked by analysts, market watchers and industry commentators. In some European countries, family businesses comprise the majority of firms. Together, they represent a diverse cohort, from tiny two-person operations to global organisations that employ thousands.
European Family Businesses (EFB) is the EU federation of national associations representing long-term family owned enterprises. The EFB has recently released its latest family business barometer which is the result of an extensive survey of nearly 200 family businesses in 27 countries.
In a world of widespread geopolitical, trade and economic uncertainty, Europe’s family businesses remain largely confident and upbeat. More than half (59 percent) report rising turnover in the prior year, while another 28 percent said turnover remained steady. Business confidence is also strong with 62 percent of respondents confident or very confident about their business outlook for the next 12 months. Optimism is especially high among family businesses in Ireland (91 percent), Portugal (78 percent) and the Netherlands (67 percent).
Fostering innovation and developing their workforces’ skills are top priorities for Europe’s family businesses. Nearly three-quarters of respondents (72 percent) say becoming more innovative is very important or extremely important to their business over the next 2 years.
More than one-third (37 percent) of family businesses surveyed report increased international activity over the past 12 months,led by those in Croatia, Belgium, Ireland and Austria. That’s up slightly from 2018 (34 percent) but still well below the 65 percent seen in 2016. Respondents from Germany, Finland and the UK were least likely to have reported increased international activity.
The key priorities for family business in the UK over the next 2 years differ markedly from their European counterparts. Despite being less likely to have reported increased international activity over the past 12 months, two thirds (67 percent) report it as a key priority over the next 24 months compared to an average of one third (35 percent) across Europe as a whole.
This dynamism is also reflected in a full 83 percent of family businesses in the UK stating that they intend to diversify into new products or services compared to 50 percent in Europe as a whole. The major priorities for UK family businesses over the short-term however, are becoming more innovative - 96 percent of firms compared to European average of 72 percent - and educating and training the workforce – 94 percent in UK compared to European average of 64 percent.
UK family businesses therefore have greater growth ambitions over the next 24 months and are more willing to embrace dramatic change. This may reflect the fact that these companies face some stark choices relating to Brexit and must push further to achieve growth.
It would appear that family businesses have an eye on the future and recognise that while the core business may continue to thrive, it may not sustain the growth desired in the long run. SMEs will therefore have to develop and implement rigorous and workable strategies in order to succeed.
