Addressing the 'missing middle': Growth and globalisation

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In successive surveys since 2012, between 12 and 15% of our respondents have told us that they aim to grow aggressively over the following five years, and some have indeed done so. But our own experience of working in the sector would suggest that only a limited number achieve their very ambitious growth targets.

Many struggle to find or develop the skills they need to do this, and others are hampered by a lack of funding. Others find themselves mired in family disputes which absorb the family’s time and energies and turn its attentions inwards.

"Actually, it’s not as incongruous as it seems. About 30 years ago we founded ATD Machinery, now market leader in machinery for the cigar industry. So we were already familiar with developing and making very technical machinery. That’s what led us eventually to move into high-tech by acquiring NTS-Group, a tier-one supplier to optical and mechatronic machine builders. In that same year Additive Industries was founded … and has developed a modular 3D printing system to make metal parts for industry. Both the ideas and the opportunities were there; my next task was to convince my father and brother.”

Jonas Wintermans Co-Founder, Additive Industries, Netherlands

“We want to move from being a German company with a large international presence to an international company with German roots.”

Stefan Leitz Chairman of the Management Board, Carl Kühne GmbH & Co, Germany

Another common theme from survey to survey is growth through diversification: more than half plan to launch new entrepreneurial ventures, but one in three family firms is still operating in only one sector and in only their home market. This can expose the family firm to risk, as the whole enterprise stands or falls on one dimension.  And yet, despite their stated ambition, 72% see themselves having largely the same portfolio in five years’ time, and 53% say it is ‘not important’ to diversify at all.

Turning to international sales, and the story is very similar. Many family firms do manage to build a successful export business – in Spain, for example, this is often easier to achieve than diversification through product mix. But in general, the picture is less encouraging.

For the last few surveys, family firms have been making, on average, about a quarter of their sales overseas, while at the same time predicting that exports will rise to close to a third within the following five years. And yet from survey to survey, the actual level of international sales remains at around 25%. Likewise, in 2012, 67% said they were trading internationally, and 74% expected to be doing so in five years. But four years on, the numbers are almost exactly the same.  There are many possible factors in play here, from a lack of skills and experience, to apprehension about political risk overseas, to more recent concerns about the impact of Brexit.

Overall, however, the message is clear: whether it’s growth, diversification, or internationalisation, the ambitions of family firms remain strong, but are not being fully realised. Something is holding these businesses back. In our view, that missing piece is a robust strategic plan.

Explore the data

Use our data modeler to look at the findings from our Survey in greater depth. 

Explore five themes: Business performance & challenges; global considerations; The family business DNA & succession planning; digital; the people piece. 

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Contact us

Dr. Peter Bartels

Global Entrepreneurial & Private Business Leader, Partner, PwC Germany

Tel: +49 40 6378-2170

Peter Englisch

Global Family Business and EMEA Entrepreneurial and Private Business Leader, PwC Germany

Tel: +49 201 438 1812

Siew Quan Ng

Asia Pacific Leader, Entrepreneurial and Private Clients, PwC Singapore

Tel: +65 6236 3818

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