Yahoo Finance Family-run businesses well-positioned to lead revival of global economy
Family-run firms are well-positioned to steer the revival of the global economy, with a focus on purpose, community and patience, a new report has found.
That’s according to KPMG Private Enterprise, which released a report on the unique structure of family businesses.
The study was conducted in partnership with STEP Project Global Consortium for family enterprising, surveying 2,500 family businesses worldwide and more than 500 non-family businesses.
Respondents were also from 75 countries distributed in five macro-regions: Europe; North America, South America and the Caribbean; Asia Pacific; and the Middle East & Africa.
It found that despite the huge variation in the size and make-up of family businesses, from blue-chip companies to local high street retailers, the common factor among them all is a longer-term mindset.
This led to high levels of resilience in the pandemic, meaning they were in a key place to lead the economic recovery.
READ MORE: UK announces £20m SME Brexit support fund
Data showed that 69% of family businesses reported that COVID-19 resulted in an initial revenue decline, while 9% saw an increase specifically due to actions taken to pivot their business. Some 22% reported no revenue changes.
There was also an 8.6% workforce reduction among family businesses globally, compared to a 10.2% reduction in non-family businesses.
The report uncovered three core strategies used by family businesses to address the immediate impact of COVID-19: exercising patience, social responsibility and business transformation.
It found that family businesses are more focused on protecting their succession plans and long-term future for the next generation. This meant that they were more ready to adopt plans for the long-term, rather than just mitigating the short-term impact of the pandemic.
They also took steps to address the impact of the pandemic not only on their family and business, but on the welfare of society, and the needs of all their stakeholders including employees, customers, suppliers and local communities.
Finally, family firms were found to be 42% more likely to implement business transformation strategies than non-family businesses during the health crisis.
READ MORE: Small businesses struggle with debt as lending hits £104bn
Those with multiple generations in the business were 45% more likely to implement a business transformation strategy than single-generation family firms.
Andrea Calabrò, STEP Project Global Consortium global academic director, says: “One of the key differentiators of family businesses is how they define success. While profits and dividends are important financial measures, success in family businesses is also defined by both financial and non-financial objectives, such as control, transgenerational succession, social capital, emotional connection to the firm, and reputation.
“These non-financial (socio-emotional) objectives are important enough in family firms to have a direct impact on their decision making and how they measure success. It also explains why, after taking immediate actions to cushion the financial shock of COVID-19, families turned their attention to longer-term strategies for sustaining the purpose and non-economic value that the family derives from owning and managing the business.”
WATCH: What UK government COVID-19 support is available?
