Family businesses are optimistic about their recovery over the next two years, with 86% anticipating a return to pre-pandemic growth rates by 2022, according to PwC’s Family Business Survey. The estimates are encouraging as, given the health crisis, only 28% of respondents estimated sales increases for 2020, with 46% estimating decreases.
“The pandemic has been a real endurance test for companies in all sectors. Large family businesses have withstood the challenges relatively well and adapted to the situation, and most now look to the future with confidence. However, there are two strategic areas in which family businesses must continue to improve in the coming period: digital transformation and sustainability strategy, and social and environmental projects”, said Mihai Anița, PwC Romania Partner.
The impact of COVID-19 on sales is uneven across sectors. Of those in hospitality and leisure, 84%, the highest proportion of any sector, expect a contraction, followed by 64% in automotive and 63% in entertainment and media.
Regarding the measures taken during the pandemic, 80% of family businesses have enabled home working for employees and 25% have repurposed production to meet pandemic-related demand. Only a third of family businesses have had to cut dividends and only 20% have needed access to additional capital.
Looking to the future, 80% of family businesses plan to diversify or expand into new products or markets.
Digital transformation has been delayed
Although 80% of respondents say that initiatives related to digitalisation, innovation and technology are a top priority, progress in those areas has been slow. Only 19% say that their digital journey is complete, with 62% believing that they have a long way to go. Of businesses that report having digitalised their operations, 41% are in their third or fourth generation of managing the family business.
Top priorities for the next two years include expanding into new markets / customer segments (55%), improving digital capabilities (52%), launching new products / services (50%), increasing the use of new technologies (49%) and rethinking the business model (39%).
Other survey conclusions
- Of the respondents, 64% expect to grow in 2021, and 86% expect growth in 2022.
- With 58% saying that all family members share similar views about the company’s direction and only 23% of respondents reporting that they have never had a disagreement, the survey indicates good levels of trust, transparency and communication. Despite that, the report highlights the need for a clear conflict-resolution policy, with only 15% of respondents having such strategies in place.
- The survey confirms an uptick in business succession planning: 30% of family businesses now have a formal succession plan, up from 15% in 2018.
- Top three long-term priorities: protecting the business as the most important family asset (82%), ensuring that the business remains in the family (65%) and creating a legacy (64%).
Now in its tenth year, the latest PwC Family Business Survey was conducted among 2,801 family business leaders from 87 territories, including Romania. The data for Romania will be published in the coming period.