Europe’s family businesses optimistic, but challenges on the horizon

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• The European Family Business Barometer shows although confidence is stable, concerns surrounding profitability persist

• Hiring people and acquiring skills continue to be flagged as major challenges.

• The majority of surveyed family businesses report an increase in turnover and staff numbers.

EFB and KPMG launch the third edition of the European Family Business Barometer, which seeks to measure the confidence levels of family-owned businesses across Europe.
The outlook for family business remains positive with confidence remaining stable at 70% (compared with 71% in June 2014). However, as was the case in the 1st and 2nd edition, the decline in profitability continues to be the one of the primary concerns for family businesses (cited by 47% of respondents); representing an increase of 9% over the last twelve months.

In the previous editions, there were warning signs on employment and skills. This seems to be confirmed as challenge surrounding the ‘war for talent’ has been steadily rising. In this 3rd edition, it has been flagged as the second biggest challenge for respondents (42%); a jump of 6% since the last edition in June. In addition, the ‘cost of labour’ has risen rapidly to third place in the list of challenges facing businesses, with a swing of 15% to 29% in twelve months. Therefore, it is not surprising that 50% of respondents would welcome reforms in labour market regulation.

On a positive note, our survey indicates that family businesses are still continuing to grow. 54% of respondents are now reporting that their turnover has increased (compared to 44% in June 2014). In addition, 48% of respondents have increased staff numbers in the last six months, a rise of 8% since June 2014.

Quote Roger Pedder, EFB President:

‘The results of this third edition show once again that family companies are growing. However, as we saw from the last edition the pressures on profitability, the worrying trend surrounding the ‘war for talents,’ and the complexity surrounding employment are still present. This should act as a signal to policy makers that urgent action is needed ’

Quote Christophe Bernard, Global Head of KPMG’s Family Business Practice:

In this third Barometer it is really encouraging to see that Family Businesses are consistently optimistic about their future despite the complex economic environment in which they operate. The research has demonstrated a steady growth curve over the last six months and respondents are actively planning new investments in the coming months. Nevertheless, they are again challenged on profitability and increasingly concerned about hiring and retaining best talents. These issues will continue to be at the top of the family business agenda as we move into 2015.

The European Family Business Barometer is based on the responses of an online survey from 878 questionnaires which were received from family businesses across 18 European countries; this third edition was open from 15 September to 20 October 2014.

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Stelios Orphanides is a journalist at CyprusBusinessMail.com. To contact Stelios Orphanides: [email protected]