"Family firms are crucially important for Europe. They make a significant contribution to Europe's GNP and employment, and tend to be great innovators, with a longer-term vision. They also tend to be firmly rooted in their regional and national culture, displaying the sort of European values that we all share."JOSE MANUEL BARROSO, Former President of the European Commission.The family business is particular because of the extent to which business and ownership are intertwined with family. In Malta, as in the rest of Europe, most of these businesses are SMEs. However they can come in various shapes and sizes, from small to large, listed or unlisted.
Bank of Valletta and PwC teamed up to organise the Family Business Forum four years ago, and annually ever since. The main goal is to create a space where players and key stakeholders meet to better understand the reality and prospects of family businesses. Various issues such as good business administration, corporate governance, the new regulatory framework and the importance of professionalising the sector were treated. The Forum also includes a panel session featuring Maltese entrepreneurs who share their experiences and lessons learned during their entrepreneurial journey. The Forum also serves to launch the results of the latest Family Business Survey conducted by PwC among local family businesses.
One of the greatest challenges family businesses in Malta face, as their peers in the rest of Europe, is the transferring of ownership and/or management of the business to the next generation. In fact, the latest Family Business Survey conducted by PwC reveals that 80% of family businesses in Malta do not survive beyond the 2nd generation. Other issues that are top of mind for Maltese family businesses include the need to innovate to keep ahead, intensifying competition and attracting and retaining talent.
An increasing number of Family Businesses recognise the importance of establishing new ventures beyond our shores, with 3rd generation businesses acknowledging that internationalisation is almost inevitable, particularly for established businesses. It is estimated that the amount of foreign sales as a proportion of overall sales will increase to 30% over the coming 5 years. Among the factors Maltese businesses consider when deciding whether or not to go overseas are economic and political stability of that market, its growth potential, the language, culture and the proximity of the potential new market.
There is no blue print for venturing into a new market. Different markets vary as much as individual companies. Companies need to update their strategy in international markets to keep pace with competition, customer preferences and economic shifts. As highlighted in the forum discussion, entrepreneurship and vision are key ingredients to a successful journey beyond our shores.
The survey concludes that the biggest hurdle is taking the first plunge. The experience gained will give the management the necessary insight and confidence to seek further expansion.
Bank of Valletta remains committed to support family businesses in their journey to grow and evolve fully cognisant that family businesses are key to the economic prosperity and success of our country.
Published on The Commercial Courier – December 2016