Family-owned firms lagging international rivals

Family-owned firms lagging international rivals

Irish family-owned businesses are lagging their international counterparts in terms of strategy planning and digital readiness, according to research carried out by PwC.

As much as 64% of family-run companies, here, lack a formalised strategic plan, while 40% feel "vulnerable" to digital disruption and the rising influence of new technologies on their day-to-day business, the findings show.

These levels compare to respective global averages of 51% and 30%.

Furthermore, only 18% have a formal, documented succession plan even though 53% said they plan to pass on management or ownership of the company to the next generation of the family.

Just 14% of Irish family businesses said they expect to have significantly changed their business models in two years' time, compared to 20% globally.

Despite widespread challenges and uncertainties - Brexit included - Irish family-run businesses remain in good health and optimistic about the future.

More than 85% of them expect to see revenue growth in the next two years.

However, the pace of this growth is likely to slow.

A quarter of family businesses saw double-digit percentage sales growth in 2018, but only 15% expect growth to be as strong in the coming years.

In order to achieve such growth, a third of companies expect to be involved in merger/acquisition activity in the next two years.

"A key disruption continues to be Brexit, which is and will be an increasing concern, as developments unfold in the UK," said PwC's entrepreneurial and private business practice director Owen McFeely.

We urge those family businesses trading with or through the UK to intensify their Brexit plans.

"The survey highlights that Irish family businesses have some way to go compared to global counterparts to diversify their businesses. In light of Brexit, seeking scale in international markets needs to be considered.

Strategic planning, PwC's report said, "remains a blind spot" for many Irish-owned family businesses.

"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," said PwC's John Dillon.

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