Family firms remain a vital part of Ireland's economy and are a primary source of job creation across the nation. But in spite of that, there is a distinct gap in terms of where these firms are positioned now and where they could be in the years ahead.
The survey results show that there is a desire to move from short term, solely tactical activities to medium and long term strategic activities. But that is where the gap exists, the missing middle between the status quo and real success through strategic activities.
100 firms in Ireland took part in the research that makes up this report and which informs the 8th Global Family Business Survey, which saw some 2,800 businesses in 50 countries providing their opinion on a range of topics.
The family business sector in Ireland remains vibrant, successful and ambitious. These firms are a vital part of our economy, offering stability, a commitment to the long term and responsibility to their employees and their communities.
Although they see success in broader terms than profit and growth, and are more able to make agile business decisions, the absence of change from survey to survey in areas like succession, diversification, digital readiness and innovation are a cause for concern.
Succession for family businesses is a key to longevity and the most obvious potential point of failure for a family business. The survey revealed that almost two thirds of Irish family businesses have no plans to pass on their management to the next generation.
A well manages succession process can be a rallying point for the family firm, allowing it to reinvent itself and find a new energy for growth and diversification. Commitment to a robust succession plan is an essential component for continuity and future success.
Irish family businesses have performed well in the last financial year, with 71% experiencing growth and 91% expecting sales increases in the next five years. However, many find it difficult to find the skills they need, recruit and retain top talent and are hampered by a lack of funding.
Whether it is growth, diversification or having an expansion plan beyond their existing markets, the ambitions of family firms remain constant. That does not mean that they are being fully realised. The missing piece appears to be robust strategic plans that links the future with the here and now.
"Having a digital strategy is a huge competitive advantage and can help you make smart decisions and see trends early. There are also huge benefits from digital marketing as you can interact with your customers in a whole different way.”
Our work with family businesses shows they struggle to change and find it hard to innovate, with 58% saying that the need to innovate is a top challenge in their five year plans. The next generation see this as a real challenge for the future success of the family firm, and acknowledge they struggle to make the case for change.
All businesses are aware that technology is critical in innovation, and 45% of family businesses say they find keeping pace with digital change is a key challenge. Just 55% stated that they have an integrated digital strategy in place which is fit for the digital age.
The issues of succession planning, diversification and digital readiness are symptomatic of a wider issue for family businesses. While able to take the long term view in terms of planning, and their capacity for dealing with the practicalities of running a business from day to day, the gap lies between those poles.
Having a strategic plan that links where the business is now and where it could be in the next five to ten years, and which is intrinsically linked to the issues outlined above, can turn early promise into sustainable success. Family businesses are extremely capable of executing plans, but they need to be created, communicated and committed to to achieve long lasting returns.
Business leaders in this sector want to ensure they have kept the family business growing and let it in a better state for future generations - a legacy of fairness, honest and hard work is an ideal they aspire to.
This legacy includes important factors like financial security for the next generation and to keep the business in the family, as well as having business longevity, to keep growing and remaining profitable for generations to come.