PwC yesterday released its 2019 Irish family business survey, which is part of a major global initiative comprising nearly 3,000 respondents in 53 territories, including 129 in Ireland. The survey is undertaken approximately every two years.
The survey finds that the vast majority (86%) of Irish family businesses expected revenues to grow in the next 2 years. However, the pace of this revenue growth is expected to slow - while a quarter (25%) experienced double digit growth in 2018, just 15% expect sales to grow quickly in the coming years. To achieve this growth, a third (33%) expect to be involved in a merger or acquisition in the next 2 years.
The survey demonstrates a clear link between putting values at the heart of strategy and strong growth prospects. For example, 80% said that having a clear sense of values and purpose directly increased their businesses’ revenues and profits. A similar proportion (79%) said it made their business more attractive to potential joiners. However, while 78% (Global: 75%) believe their stronger values and purpose gives them a competitive advantage, only 35% have those values articulated in written form (Global: 49%).
The survey further highlights that businesses who achieve greater than 10% growth are ahead in terms of business disciplines. For example, 91% of these faster growing businesses had a clear sense of agreed values and purpose compared to 75% for family businesses with lower growth; 47% had made significant steps in terms of digital capabilities compared to 38% for those with lower growth.
The report highlights that these growth expectations are not always achieved. Focusing on strategic planning remains a blind spot for too many family businesses. Nearly two-thirds (64%) of survey respondents admitted to not having a fully costed, formalised and documented strategic plan for the next 3-5 years, with global counterparts doing better (51%).
Of the 36% of Irish respondents who have formal plans in place, 41% were experiencing double digit growth. PwC says this demonstrates the strong link between strategic planning and performance excellence, the value of building up the disciplines that, over time, create a distinctive legacy.
The single key challenge holding up future growth, according to the survey, is Brexit (58%) with Irish family businesses being much more concerned than global businesses (11%). At the same time, the survey highlights that Irish family businesses can do more to diversify their businesses compared to global counterparts. For example, nearly half (46%) currently operate in only one sector and in one country (Global: 30%) and just 29% said they will be selling their goods and services in new countries in two years’ time (Global: 38%).
Speaking yesterday, PwC Entrepreneurial & Private Business Leader, John Dillon said, "The survey confirms that Irish family businesses, despite external risks, are ambitious for the future. The message from the survey is clear: adopting an active stance towards business and family values generates real benefits that pay off in real terms. Business values should be clearly defined and articulated, but also embedded in the business culture and the day-to-day decision-making, and regularly reviewed."
He added, "A commitment to a clearly defined set of values is not only good for better financial performance but also improves talent attraction and retention, and can also help family businesses navigate the challenges of technological and competitive disruption."