No Match Found
PwC Malta has just released the latest edition of its Family Business Survey. The survey highlights growth amongst local family businesses, during the period covered by the current survey, with 80% of respondents expecting further growth in the next two years. This is an important view given that family business remains a key pillar for the Maltese economy. This growth brings along with it common challenges that family businesses must face, such as keeping up with technological advancements. In fact, the key challenges identified by local family businesses were accessing the right skills and capabilities (69%) and the need to innovate and keep ahead (54%).
The survey sheds light on changes affecting the business environment that have had an equal influence on the family business sector. Digital disruption, changing expectations of stakeholders and the revolution of the world of work have had an impact on the opportunities and challenges now faced by family businesses. Most noticeably, this edition of the survey demonstrates a link between putting values at the heart of strategic planning and strong growth prospects.
While 93% of family businesses have a clear sense of agreed values and purpose, only slightly more than half (57%) of respondents have those values and the company’s mission articulated in written form. The results also show that such values can benefit family businesses, especially in the areas of employee recruitment, retention and business reputation. For example, 96% of local respondents say that values and purpose improved the company’s reputation.
“Family businesses need to adopt a mindset of profit with purpose, leveraging their strong values to enhance their reputation, legacy and resilience in an ever-changing business environment. These values will guide businesses to be sustainable in their approach and take well-informed decisions in the interest of all stakeholders. To be successful in the future world of work family businesses must invest in reskilling and upskilling their workforce, enhancing their people experience and embracing new technology. This requires comprehensive strategic planning which is lacking in local family businesses given that over half of respondents (52%) were found to have no formal strategic plan in place. Taking these steps will result in family businesses being better equipped to build a competitive advantage in a digital age and secure a lasting legacy that is fit for the future.”
The survey provides insights into how the pace of technology advancements is influencing family businesses. 39% of local businesses feel vulnerable to digital disruption and more than half of respondents (52%) feel that they are vulnerable to a cyber-attack. In fact, 54% of respondents foresee that they will step up their digital capabilities in the next two years. It is not enough to invest in the latest technologies to address the rapid changes in the market. Businesses also need to reskill and upskill their workforce to remain competitive and stay ahead.
This edition of the survey also focusses on the role of the next generation in family businesses. 63% of next gens work in the family business however, well over a third of respondents indicated that neither ownership nor management will be passed on to the next generation. This could imply that nowadays next gens have many opportunities outside of the family business resulting in a lack of interest in or moving away from the business their predecessors built. In this case, it is vital for family businesses to have a clear succession plan. Having said this, only 9% of local family businesses have a formalised and well-communicated succession plan.
“Continuity and succession planning remain a key priority for family firms and their stakeholders to be prepared for the future. So much so that the Government of Malta introduced legislation to provide incentives and support family businesses in their transition from one generation to another through the Family Business Act. Furthermore, we see the importance of such plans as we try to navigate through a digital age, meet changing stakeholder expectations and encourage new ideas from the next generations. Planning for the future will bring about new challenges, but more importantly will present new opportunities for family firms to seek further growth.”
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