The future looks bright for UK family businesses according to our recent CEO survey. Similar to other UK CEOs interviewed for PwC’s 21st CEO Survey, heads of family businesses are positive about their own businesses prospects with only 10% not confident about revenue growth over the next 3 years. They are still aware of clouds on the horizon, if anything, the family business CEOs are more concerned than their UK peers about economic, policy, social and environmental threats with geopolitical uncertainty, uncertain economic growth and the increasing tax burden topping the list. Whilst these threats could impact growth, family business CEOs trust in their organisation’s ability to respond quickly and their people to keep them on the path to success.
‘I think it’s in our DNA to constantly re-invent the business, to be constantly investing in it to try and come up with innovative new products’
It was interesting that with 43% of family business CEOs expecting their headcount to remain the same availability of key skills topped the list of threats to the growth of their business. For many the solution is to develop those skills within their organisation. When asked about their people strategy in a digital age 94% of family business CEOs agreed they needed to strengthen soft skills alongside digital skills. Nurturing talent is critical for family businesses as another CEO pointed out
“The thing about successful businesses is people see things early. Processes don't see things early. People that see things early, get things done and make sure the process and the asset is right. If you see it at the same time as someone else sees it, you're a follower.”
Over the 12 months, 89% of UK family business CEOs surveyed are planning for growth and profitability to be driven organically. This is consistent with the CEO survey findings across the UK and globally and reflect confidence in their own business’s performance and limited appetite for risk given the level of geopolitical and economic uncertainty. 70% of those CEOs are also planning to use cost reduction to drive growth and profitability with 45% planning strategic alliances or JVs. Whilst these strategies have served family businesses well in the past CEOs now also need to consider their growth strategy in a digital world.
Whilst keeping an eye on the geopolitical threats and economic uncertainty it was noticeable that UK CEOs, including those from family businesses, appeared less concerned by changes in their market disrupting their businesses in the next 5 years. 81% of family business CEOs were concerned about cyber impacting the growth of their business while only 30% of the CEOs were clear on how robotics and AI can improve customer experience compared with nearly half of CEOs globally. Similarly 63% of the CEOs surveyed globally were concerned about new market entrants while only 47% of UK family business CEOs shared their concern in fact there were only two threats of lower concern - ethical scandals and activist investors. In part this comes from the confidence family business CEOs have in their values, culture and people. There is also knowing what you know as one CEO points out
“Making sure that we have the expertise within the business and then we have the financial capability to deal with change as it arises, and that’s the best thing you can do as a privately owned business; otherwise, it’s a bit of a guessing game.”
In uncertain times there are as many opportunities as risks. Many family businesses will have come through the last economic downturn stronger with a loyal workforce and a strong sense of culture and values. They can take advantage of this to continue to invest in their people, R&D, and evolve their businesses. Inevitably there will also be disruption ahead. Emerging technologies are changing markets and how customers access them. To make the most of these opportunities family businesses must continue to innovate, monitor future trends particularly any new technologies impacting their sector, and continually revisit their medium / long term strategy. These are exciting times for family businesses.