Sustaining the growth trajectory
Canada’s family businesses are in good health, with 87% expecting to grow in the future. Despite the optimism, they face several challenges that could affect their growth prospects. The top challenges for Canadian businesses include innovation (57%), accessing the right skills and capabilities (57%), the economic environment (49%) and domestic competition (48%). But as our survey found, family businesses do see a competitive advantage in their values and sense of purpose. Among Canadian respondents, 88% said they have a clear sense of agreed values and purpose as a company. Of that group, 83% believe those values give the organization a competitive advantage.
Attracting and retaining talent
Attracting and retaining talent is a big concern for Canadian businesses, with 84% citing this issue as a top personal and business goal for the next two years. While family businesses may not always be able to match the compensation offered by public companies, they can get an edge on talent acquisition through the more family-oriented work environments they can offer. Company values can be an important part of creating an environment that attracts and retains talent. According to our survey, 92% of Canadian family businesses with a clear set of agreed values believe they make the company more attractive to potential new employees. Another 90% believe those values make the company a happier place to work, while 88% think they’ve improved staff retention.
The need to survive and thrive amid disruption
More Canadian family businesses (33%) felt vulnerable to digital disruption in 2018 than in 2016 (20%). Whether from known competitors, newcomers to the market or new technology, businesses are more aware of their vulnerability in the digital age. But many Canadian family businesses (43%) expect to have made significant steps in terms of their digital capabilities in the next two years, while a significant number (26%) believe they’ll be selling goods or services in new countries. Only 10% expect to have significantly changed their business model over that time period.
Protecting your legacy
As they think about the future, 78% of Canadian family businesses want to protect their business as the most important family asset. They also expressed a desire to keep the family connected to the success of their business. Among the top long-term goals cited was a desire to keep the business in the family (60%), build a legacy (60%) and create dividends for family members (60%). When it comes to succession planning, only 19% of Canadian family businesses have a fulsome, formalized plan in place. And of those with any sort of plan, 71% have discussed it with other family members. Family members are often at the centre of those plans, with 48% looking to pass management and/or ownership of the business to the next generation.
Looking outside the family to private equity
While keeping the family connected to the organization is a clear concern for survey respondents, many are willing to look elsewhere to less traditional sources to fund the business. While family businesses have tended to turn to bank credit and internal resources for funding, 39% of global respondents said they’d be willing to look at private equity as a financing option. In Canada, almost half of family businesses were open to private equity as a funding source.