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PwC: 2019 US Family Business Survey

Creating stronger foundations for the future.

Originally Published by PwC.

By Jon Flack, US Family Business Leader

Welcome to our 2019 edition of PwC's US Family Business Survey

  • 62% expect upcoming family members gain outside work experience
  • 58% have succession plans, however most are informal
  • 47% of next generation leaders take on non-senior roles in the business
  • 39% sit on the board of directors

This year's findings speak to the importance of being prepared to compete in a far more digital economy, a challenge for business leaders everywhere. CEOs globally are working to bridge gaps in their data capabilities. Yet family businesses are coming into this arena with an advantage. They have built valuable trust among loyal employees and their ownership group. So how to turn values like loyalty and hard work into a multi-generational success story? We see four moves ahead to consider to build a lasting and profitable legacy:

  1. Codify your values and purpose into your strategy. If this is where your family business has a competitive edge, take it to the next step.
  2. Ensure the next generation is deeply involved - they have a lot to offer families grappling with digitalization.
  3. Determine the skill sets needed for a more digital future. Raising the 'Digital IQ' of the business is closely entwined with raising digital capabilities of existing workforce and determining future skill sets. With 80% of US CEOs expecting AI to significantly change the way they do business in the next five years, the race for talent will only intensify. US family business leaders are aware of the challenges, keeping and rewarding employees are seen as top priorities.
  4. Professionalize the board by bringing in independent directors with external expertise in future growth areas for your business.

Thinking through the implications of a more digitally-integrated economy should not be decoupled from thinking through who should run the business in the future and who can best help guide it.

I hope these findings serves as a useful starting point for conversations you will have with the current and next generation of leaders as you set a course for continued success.

You're invited to register with us to receive the full report. Let us know if you have any questions or would like to discuss.

PwC Survey: Strategic Planning, Not Economic Headwinds, Affects Family Business Growth

PwC survey finds that slow or no progress on strategic planning could impact growth.

Despite economic uncertainty, almost two thirds (64%) of family businesses have grown over the past year, according to a new global survey of over 2800 family businesses in 50 countries by PwC (No. 5 on the DiversityInc Top 50 Companies list).

The sector has ambitious plans to grow again over the next five years despite global economic head winds with only one in five family businesses reporting a drop in sales in the past two years.

Family businesses in Asia Pacific are the most ambitious, with 21% looking for the quickest and most aggressive growth according to findings from PwC's biennial global survey of family businesses: The 'Missing Middle': Bridging the strategy gap in family firms.

Family businesses in Western Europe (10%) and North America (12%) have lower levels of ambition for quick and aggressive growth with respondents in these regions mainly predicting 'steady growth'. Globally, 15% of respondents aim to grow quickly and aggressively in next five years and 70% aim to grow steadily.

In the near term, respondents do not see Brexit affecting their ambitions for growth (only 15% globally say it will have a negative impact).  Unsurprisingly, fears about the potential impact of Brexit in the next 1-2 years were highest in the UK (38% - over twice the global average of 15%) and among EU countries (22%). Globally, 83% said they were not planning to take action to address Brexit.

Despite the relatively steady outlook, the report warns that family businesses' growth outlook could be curtailed by the organisation's own lack of strategic planning rather than economic factors or other external concerns. In fact, many issues now facing family business come back to a lack of strategic planning – the 'missing middle' – namely having a strategic plan that links where the business is now to the long-term and where it could be. This results in many families not being able to turn early promise into sustainable success.

While some family firms are managing strategic planning well, many are caught between the deluge of every day issues and the weight of inter-generational expectations. PwC found that in survey to survey, areas such as succession, diversification, digital, cyber security, and innovation, are not being tackled.

Stephanie Hyde, Global Entrepreneurial & Private Business leader, PwC, comments:

"It is clear family firms remain a vital part of economies across the world, contributing the bulk of GDP in many territories, and are a primary driver of job creation."

"Overall, their performance and outlook for growth remain strong with notable progress on professionalisation, but less so on strategic planning. Having an ambition to grow, without a strategic plan of how to get there, is just an aspiration. Not only is it limiting their ambition to expand and grow, it could also expose them to additional risks that they have not effectively planned for."

In three successive surveys now, family businesses have made on average, around a quarter of their sales overseas with ambitions to raise that to a third. Yet in each survey, international sales have remained at around 25%. One in three family firms are still operating in only one sector and still only in their own home market, yet just under 80% plan to export/sell goods outside of their home market within five years.

A number of the key challenges respondents from over 2800 businesses in 50 countries identified related to their strategic planning:

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