Some 80% of Maltese family businesses expect further growth of their operations in the upcoming two years, according to the most recent findings of PwC Malta’s Family Business Survey. As family businesses remain the key pillar for the Maltese economy, PwC has welcomed the positive results.
While 93% of family businesses have a clear sense of agreed values and purpose, only slightly more than half (57%) of respondents have those values and the company’s mission articulated in written form, the PwC survey has found.
In addition, the results show that such values can benefit family businesses, especially in the areas of employee recruitment, retention and business reputation. For instance, 96% of local respondents say that values and purpose improved the reputation of the company.
“Family businesses need to adopt a mindset of profit with purpose, leveraging their strong values to enhance their reputation, legacy and resilience in an ever-changing business environment. These values will guide businesses to be sustainable in their approach and take well-informed decisions in the interest of all stakeholders. To be successful in the future world of work, family businesses must invest in reskilling and upskilling their workforce, enhancing their people experience and embracing new technology,” said David Valenzia, Territory Senior Partner at PwC Malta.
“Family businesses must invest in reskilling and upskilling their workforce, enhancing their people experience and embracing new technology.”David Valenzia, Territory Senior Partner at PwC Malta
“This requires comprehensive strategic planning which is lacking in local family businesses given that over half of respondents (52%) were found to have no formal strategic plan in place. Taking these steps will result in family businesses being better equipped to build a competitive advantage in a digital age and secure a lasting legacy that is fit for the future,” Mr Valenzia added.
Growth, however, always comes with challenges, especially when one needs to keep up with the latest technological advancements. The key challenges family businesses need to face appear to be accessing the right skills and capabilities, claimed by 69% of the respondents, and the need to innovate and keep ahead, said 54% of the respondents. Challenges have been amplified by digital disruption, changing expectations of stakeholders and the revolution of the world of work.
Digital, next gen challenges
The survey also shows that 39% of local businesses feel vulnerable to digital disruption and more than half of respondents (52%) feel that they are vulnerable to a provisional cyber-attack. In fact, 54% of respondents foresee that they will step up their digital capabilities in the next two years.
Although 63% of the younger generation (next gens) work in the family business, over a third of respondents believe neither ownership nor management will be passed on to the next generation. This might be an implication that opportunities outside of a family business attract next gens to abandon the business of their predecessors. Therefore, PwC Malta finds it vital for a family business to have a clear succession plan, as only 9% of local family businesses have a formalised and well-communicated succession plan.
“Continuity and succession planning remain a key priority for family firms and their stakeholders to be prepared for the future. So much so that the government of Malta introduced legislation to provide incentives and support family businesses in their transition from one generation to another through the Family Business Act,” said Michel Ganado, Advisory Partner at PwC Malta said.
“Furthermore, we see the importance of such plans as we try to navigate through a digital age, meet changing stakeholder expectations and encourage new ideas from the next generations. Planning for the future will bring about new challenges, but more importantly, will present new opportunities for family firms to seek further growth,” Mr Ganado added.