The bi-annual survey of Australian family businesses reports that 83 percent of the survey’s 570 respondents believe their shared values and ethos, accompanied by a long-term and consistent approach to strategic planning has mitigated ongoing economic uncertainty.
The survey further shows that the majority (88 percent) of family firms felt they performed better than their non-family business counterparts in product and service quality, productivity, innovation, growth, and financial performance.
Bill Noye, Head of KPMG’s Family Business practice says the results validate the long-held view that the family business model makes good economic sense.
"Family businesses have the competitive advantage over their non-family counterparts because of the commitment they have to the business and the communities in which they operate. They are usually heavily invested both financially and emotionally which leads to the impetus for strong innovation and strong customer satisfaction, ultimately resulting in them outperforming their key competitors," says Mr Noye.
The survey shows that family values play an important part in family business growth, with 84 percent of respondents stating that family values have a considerable impact on the way the business is operated. In addition, businesses that had processes for incorporating the family’s vision reported both superior business performance and achievement of family-oriented goals, compared to those that did not have such processes.
"Most family businesses share a consistent vision that stems from their shared family values which permeate through the organisation’s culture and drives the way they do business," says Mr Noye.
Philippa Taylor, CEO of Family Business Australia says these family values are often a key contributor towards attracting and retaining talent crucial to family business growth.
"There is a certain sense of belonging that is unique to family businesses and non-family employees often feel that they too have a stake in the business, which is key to any organisation’s success," says Mrs Taylor.
Governance of the family business is a growing priority with the majority of family businesses possessing a formal governance in place, signalling the increasing awareness that governance aids financial performance.
The survey found that businesses with a formal advisory board performed better than those that did not have a formal advisory board, both in terms of business performance and family-oriented goals.
"Family business owners are very passionate and commited to their business but are often held back by the lack of a formal strategy and accountability. While some family members may feel their business is too small to have a board in place, the benefits of taking that step towards professionalisation have been proven beyond doubt," says Mrs Taylor.
Issues of succession planning and exit continue to challenge family businesses with only one third of respondents stating that they were succession ready, despite almost 66 percent of the survey’s respondents being at least 50 years old.
"As well as developing the next generation of owners, succession planning is about the continuity of the business and ensuring that the value of the business is maximised. Implementing a succession plan and enacting an exit strategy early will enable the family to explore all alternatives before putting in place the most viable one," says Mr Noye.
- 83 percent say being a family business has mitigated the challenges of ongoing economic uncertainty
- 55 percent have a formal advisory board in place
- 33 percent have an exit strategy or succession plan (67 percent do not)
- 71 percent intend to keep the business in the family by passing ownership on to the next generation.