The bi-annual survey of Australian family businesses reports that 83% 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 an 88% majority of family firms felt they performed better than their non-family business counterparts in product and service quality, productivity, innovation, growth, and financial performance.
The family business model
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."
The significance of family values in family business growth
The survey shows that family values play an important part in family business growth, with 84% 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.” – Bill 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.”
Governance and financial performance
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.” – Philippa Taylor
Succession planning and exit strategy
Issues of succession planning and exit strategy continue to challenge family businesses with only one third of respondents stating that they were succession-ready, despite almost 66% 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.” – Bill Noye
Key findings from the survey include:
- 83% say being a family business has mitigated the challenges of ongoing economic uncertainty
- 55% have a formal advisory board in place
- 33% have an exit strategy or succession plan (67% do not)
- 71% intend to keep the business in the family by passing ownership on to the next generation.
This survey was originally published by KPMG Australia.