With growth potential on the radar - innovation and succession planning
are a must
TORONTO, Feb. 25, 2013 /CNW/ - Sixty per cent of Canadian family
businesses reported sales growth in the last year and in the next five
years, 87% plan to grow steadily. However, securing talent to drive
this growth is a challenge, according to the Canadian supplement of PwC's Global Family Business Survey.
For the next five years, attracting a skilled workforce is the top
concern for 62% of Canadian family businesses (up from 56% in 2010),
while the economy is the primary issue (66%) for global respondents.
Sharon Duguid, Director, Centre for Entrepreneurs and Family
Enterprise, PwC, says "The difference lies in the relative stability of
the Canadian economy, aging workforce and the tight talent pool Canada
Duguid continues, "Everyone is competing for the same talent. Typically,
family businesses are not able to compete with multinational players
when it comes to compensation. On the development end, their
conservative growth strategies are not appealing for younger talent who
want to climb the ranks quickly."
However, a family businesses' structure can offer significant benefits -
particularly their agility, continuity and their long-term perspective
mindset. Duguid says, "Family businesses need to do more to highlight
their competitive advantages; their commitment and loyalty to their
people. People are attracted to companies that have strong values and
where they know their efforts will be recognized - both of which are
characteristics of family businesses."
Who's taking over - Family ties or step outside?
Just over half of Canadian family businesses (51%), compared to 41%
globally, plan to pass on the management of the business to the next
generation, while an additional 14% of Canadian family businesses plan
to pass on ownership, but employ non-family members to oversee the
business. A further 16% don't know what they will do at this stage.
"Few families in Canada are having the conversation and asking their
children whether they're interested in taking over or not, whereas in
Europe and Asia, families start that dialogue with their children early
on," says Duguid. "It's critical to be transparent and set the
guidelines on how the business will be transferred from one generation
to the next because this can build the family firm-or break it."
Duguid adds, "Clear communication is essential throughout the entire
business, especially when dealing with conflict. It's important that
the right procedures are in place to resolve issues as efficiently as
possible." More than 80% of those surveyed have procedures in place to
deal with family conflict. The top three procedures include:
Shareholders' agreement (69%)
Incapacity and death arrangements (61%)
Entry and exit provisions (45%)
Local vs. Global
Canadian family businesses remain focused on growing domestically as 65%
of respondents do not generate sales from exporting goods or services
to foreign markets. In the next five years, 26% of Canadian family
businesses surveyed have no plans to move into new markets at all.
Globally, sales in international markets account for a quarter of total
sales today and are expected to grow to 30% in the next five years.
"This reluctance to expand into global markets is a problem for Canadian
family business," says Tahir Ayub, Canadian Private Company Services Leader, PwC. "Growth activity lies in the developing markets - where the demand
is. It's impossible to grow significantly in the next five years
unless you dive into the international markets."
Canadian family businesses cite a number of factors as challenges to
Exchange rate fluctuations (32%)
Containing costs (21%)
"Regardless of size, we're digitally connected. Anyone can reach into
your market and offer consumers the same product or service," says
Ayub. "At the same time, Canadian family businesses also have the same
opportunity with global customers. They are in a good position to take
on more risk and debt to finance global growth."
Ayub concludes, "Identified as one of the key challenges in the years
ahead, innovation will be vital for Canadian family businesses to
evolve, grow and secure a competitive advantage against its global
counterparts. Exporting is an area where family businesses can learn
and spark new ideas from other multinationals. Partnerships and
alliances are a powerful way of gaining insights from academic
institutions or larger corporations - ranging from formal business or
agency agreements in new overseas markets to informal networking."
For more information on PwC's Family Business Survey, please visit www.pwc.com/ca/familybusiness. Affiliated PwC Family Business Survey articles can also be found here:
About PwC's Global Family Business Survey
The PwC Family Business Survey 2012 covers family companies with a sales
turnover of more than US$5 million in over 30 countries/regions:
Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, France,
Germany, Greece, Hong Kong, India, Ireland, Italy, Malta, Mexico, the
Middle East (several countries), Romania, Russia, Singapore, South
Africa, South Korea, Sweden, Switzerland, Taiwan, Turkey, the UK and
the US. Interviews with top executives in 1,952 companies took place
between June and September 2012. The 2012 Canadian supplement included
77 Canadian family business interviews.
Follow PwC on Twitter at @PwC_Canada_LLP and on Facebook at www.facebook.com/pwccanada.
About PwC's Private Company Services (PCS)
More than 65% of PwC Canada's clients are private companies, ranging
from high net worth individuals to owner-managed family businesses and
large, professionally-managed businesses. PwC's Private Company
Services (PCS) group is a dedicated team of business advisors who help
private company owners resolve day-to-day business issues and achieve
long-term success. PCS offers the perspective of a third party with
professional industry knowledge, business consulting, tax and
accounting expertise. For more information about PwC's Private Company
Services, please visit www.pwc.com/ca/private.
About PwC Canada
PwC Canada helps organizations and individuals create the value they're
looking for. More than 5,700 partners and staff in offices across the
country are committed to delivering quality in assurance, tax,
consulting and deals services. PwC Canada is a member of the PwC
network of firms with close to 169,000 people in 158 countries. Find
out more by visiting us at www.pwc.com/ca.
© 2013 PricewaterhouseCoopers LLP, an Ontario limited liability
partnership. All rights reserved.
PwC refers to the Canadian member firm, and may sometimes refer to the
PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.
SOURCE: PwC Management Services LP
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