Family businesses buoyed by European recovery

European family businesses are more optimistic about their future following signs of economic recovery with the majority considering investment opportunities in their home markets.

According to a new study from the European Family Businesses association (EFB) and KPMG, more than 70% of family businesses said they were confident about their performance for the next six months and were considering domestic investments as part of their strategic plan.

“Family businesses are reserved when it comes to investing abroad because they are unfamiliar with foreign markets,” Christophe Bernard, global head of family business at KPMG, told CampdenFB.

“It can be a limiting factor but it is far easier to increase your market share in your domestic market. So it’s a question of risk and immediate returns.”

The new study entitled European Family Business Barometer, which included 710 family businesses across 18 EU countries, found that despite a more optimistic outlook almost half of the family businesses were struggling to turn a profit.

There were a number of reasons why profit margins were slim, according to Bernard.

“The general increases in costs, including taxes, raw materials or energy, makes it difficult for family businesses to post a profit,” he said, “and the ‘war on talent’ is confounding the issue by making it more difficult to find the right members of staff.”

More than a third of participants said they had difficulty finding quality staff with only 11% reducing their headcount in 2014. In contrast, nearly a quarter of family businesses reduced their headcount in 2013.

Despite the strained outlook for hiring opportunities, better opportunities for acquiring finance meant that more than 80% of family businesses were able to secure credit. Bernard said this is, in part, because of the focus family businesses place on long-term goals.

“The major reasons for family business success in this most recent report is their focus on clients and customers,” Bernard said. “Plus, private ownership really brings them a faster and more flexible decision making process and gives them long term perspective.

“When you don’t have to think of quarterly results you can have a broader view of your business,” he concluded.