Almost three quarters (74%) of family businesses in Romania registered an increase in turnover over the last financial year, while at the global level, 65% of family businesses had similar turnover increases, according to this year’s edition of the PwC Family Business Survey.
Regarding growth perspectives for the next five years, Romanian entrepreneurs are more cautious than their global counterparts: 75% of the respondents aim to develop their business over the next five years, compared to 85% at global level.
Thus, 62% of the Romanian respondents are expecting a constant growth of the business over the next five years, while 13% are betting on an accelerated and fast development. The results are similar to those of the previous edition of the study.
When asked which the most important three challenges within the company are in the next 12 months, Romanian respondents argued that they are first of all concerned about attracting key talents (49%, a ten percentage points increase compared to the previous edition).
Romanian entrepreneurs are also more concerned about the reorganisation of the company than entrepreneurs at global level (39% versus 28%).
Business and product portfolio development are major challenges for more and more entrepreneurs. Both in Romania and at global level, approximately a quarter of the respondents (23%, and 25% respectively) mention this, an increase in comparison to the previous edition of the study (6% in Romania, 10% at global level).
When asked about the most important three external challenges over the next year, most entrepreneurs mentioned market conditions and Eurozone uncertainty (56%), government policies and regulations (38%) and fierce competition (28%).
Romanian family businesses owners also mention the need for constant innovation, the general economic context, market instability, attracting key talents, fierce competition and accelerated globalisation as the main challenges for their companies over the next five years.
„Family businesses learned to navigate through murky waters and are beginning to think long-term, since the need for innovation becomes their top concern, while in the previous edition of the survey the general economic situation was considered the main threat” comments Alexandru Medelean, Director, Leader of the Private Company Services Team, PwC Romania.
The survey reveals three major concerns of the Romanian family businesses:
• The need for professionalization is becoming one of the main concerns of family businesses. The importance of becoming professional on all grounds – from systems and procedures, to company management – has increased compared to the previous edition of the survey, taking into consideration the pricing pressures, the cost increase and the megatrends that impact the global economy. Business professionalization must be accompanied by a professionalization of the family and its relationship with the company.
• Succession planning. There’s a „family factor” dynamic that can have a major effect on the company, which seems to be ignored by family businesses for now. One of these main aspects is approaching succession issues.
• The importance of innovation. Family businesses in Romania argue that it’s harder to be competitive in the present economic context and are aware of the need to keep up with changes in a more liquid and disruptive environment where innovation is key, but the skills availability is limited and competition is becoming ever more aggressive.
„Romanian family businesses are going through one of the most important stages of their evolution from 1989 to the present day – the transfer to the second generation. This stage will either end in keeping the business in the family (transfer to the second generation), either the family will lose control of the business through an exit or even, unfortunately, some companies will disappear. The proportions of these transformations are almost impossible to anticipate, however, we will have both success stories and also dramas. From this perspective, both the costs and the benefits of this process will impact the business founder’s wallet and, thus, must be approached with great care and responsibility” argues Ionuţ Simion, Partner, Leader of the Tax Services for Family Businesses Team, PwC Romania.
„Sifted through the crisis, most Romanian family businesses are at a crossroads. The way in which they will manage to harness the advantages and address the challenges, both internal and at global level, where the speed with which change take place has went beyond any projected forecasts, will be decisive for the future of the Romanian capital” concluded Mihai Aniţa, Partner Leader of the Assurance Services Team for Family Businesses.
Methodology
The PwC survey regarding family businesses took into account companies with a $5 mil. or higher turnover. Over 2,378 semi-structured interviews were conducted over the phone or via online questionnaires with stakeholders (owners and CEOs) within family businesses in over 40 countries around the world, in the third trimester of 2014 by Kudos Research, London. The interviews were conducted in the local languages by native speakers and lasted between 20 and 35 minutes. The results were analysed by Jigsaw Research. In Romania, 61 interviews were conducted.
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