We’ve talked to almost 2,000 respondents, large and small, around the world, from both developed and emerging markets, across a broad range of industries. We found remarkable similarities among the diversity.
The next frontier for more and more family businesses is overseas expansion: 67% of respondents had some level of international sales in 2012. By 2017, that number will jump to 74%.
Recruiting and retaining the right talent is a challenge for family businesses: 64% of them are planning to bring in non-family management in 2012.
While 4 in 10 respondents will pass on ownership and management to the next generation, 25% will pass on ownership but bring in professional managers,citing the next generations lack of skills as an issue.
While our survey revealed striking similarities among all family businesses, we found -- as might be expected, given the vastly different regional economic conditions around the world -- some significant variations in outlook and habits.
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Read our report on what family businesses in 2012 are thinking and planning as they look to compete in an increasingly global marketplace.
The next frontier for family businesses: Overseas expansion
Family businesses, like other businesses, are facing big pressures to start expanding overseas in order to remain competitive.
Our survey clearly indicates that more and more family-run firms are being driven by competitive pressures -- or market openings due to innovation -- to get past their instinctual reluctance to avoid excessive risk… and are entering into foreign markets.
Nearly three-quarters (74%) of our surveyed family firms expected to have international sales by 2017 -- a ten per cent jump from today. The numbers were especially strong in Hong Kong and Singapore, as well as in Southern Europe. And while, not surprisingly, most were contemplating expanding close to home (be it within Europe, or the Americas, or Scandinavia), the trend of globalisation is inescapable.
Still, significant obstacles remain. In addition to the usual challenges of financing a scale-up and the complexities of international supply chains, family firms also face many problems that are intrinsic to their very nature.
Scaling up to overseas markets: Easier said than done
Most family firms have self-preservation in their DNA, the strength of the family culture and values tending to a market positioning that is reactive by nature.
Most have an aversion to leveraging their balance sheet or mortgaging physical assets -- which makes raising growth capital difficult -- and issues of ownership, succession, and the hiring of outside managers can present unique problems as well. So can an unwillingness for family members to relocate.
Our survey illustrates these challenges. Our respondents cited understanding the business culture overseas (20%), competition (19%), local regulations (19%), exchange rate fluctuations (16%), and local economic conditions (16%) as the main challenges they saw to expansion. A number also referred to the difficulties of managing a far more complex international supply chain.
Yet the march to internationalise in their markets continues -- underscoring that for most of our family-run businesses, the word “business” still comes first.
Benchmark your company Helping you to understand how you compare
How do your challenges, strengths and resilience compare to those of your peers across the world? We've got the qualitative and quantitative data from our large-scale survey of 1,952 family businesses across over 30 countries. We've used this knowledge to create a benchmarking tool that will not only help you see where you are, relative to your peers, but help you set a strategic course for where you want to go. Benchmark your company
Explore the data From succession planning to conflict resolution, uncover the most relevant nuggets of the survey Of those we interviewed, 80% of companies have been trading for over 20 years and 38% have been trading for over 50 years. Twenty-eight percent of businesses were third or fourth generation and 28% generated revenues of over US$100m last year. Sixty-five percent have grown sales in the last year and over 80% anticipate quick or steady growth over the next 5 years. Explore the survey data to uncover all of trends. Learn more
Territory insights How are family business owners around the world responding to the challenges and opportunities of today's economy? Family businesses are thriving globally. Sixty-five percent have grown in sales in the past year, compared to less than half in 2010. Growth is particularly strong in Eastern Europe, Latin America and the Middle East. Gain more insight into family businesses around the world. Learn more
Family business services Helping families and their businesses achieve their long-term goals At PwC, we know that the most successful family firms are those in which there is a good balance between professional management, responsible business ownership and a healthy family dynamic. We have a keen understanding of the unique dynamics of family business, and we have the tools, experience and focus to help you optimise the positive forces in your family enterprise, while anticipating and minimising any conflicts or perturbations. Explore our family business services
What family businesses told us
“Listed companies have better access to equity. Limits using private equity for family owned businesses results in growth restrictions for family owned businesses.”
“In the next 12 months, a top issue for family firms will be continuing to deal with a struggling economy, global as well as domestic.”
“International competition is now much more structured, much more professional, but on the other hand, this leaves large market niches that large companies are not attacking, precisely because of the agility of family businesses”
“[The greatest challenge is] consolidation through globalisation. Customers are getting bigger, which will put greater pressure on size of the family businesses as against large multinational or publicly owned corporates.”
“Operating in many places is hard work. We operate in 50 countries and they all differ from each other. We have to learn local cultures and habits and financial legislation and taxation vary from country to country.”