Written for Creaghan McConnell Group’s “Sharing our thinking” blog:
Many issues facing family-owned firms today are due to a lack of strategic and succession planning, says a new report by PwC.
Most firms have short-term business plans, and they can focus on the long term in a way that their public competitors can’t. But many of these same businesses don’t have a vision of what the company should look like in three to five years, according to the report.
Ninety-five per cent of Canadian family-owned firms said “securing their long-term future” was a key goal in the next five years. A “well-managed succession process can be a rallying point for the family firm, allowing it to reinvent itself in response to changing circumstances and find new energy for growth, diversification, and professionalization,” the report says. Even so, only 18 per cent of these companies have developed a succession plan that’s clearly documented and communicated.
The report is the result of a PwC’s annual survey of family-owned businesses across 50 countries. The survey included businesses with sales ranging from $5 million to over $1 billion.
PwC highlighted three areas of interest for Canadian family-owned firms:
Strategic planning: “A strategic plan is not the same as a business plan, and a plan that isn’t documented, communicated, managed, and monitored isn’t a ‘plan’ at all,” the report says. Businesses must lay out medium-term plans for the company. The strategy could include greater professionalization of the company, with more rigorous processes, clear governance structures, and outside recruitment.
Technology and innovation: Sixty-six per cent of Canadian family-owned firms recognize the value in adopting digital strategies. But the recruitment of the right individuals for the job is a challenge.
Growth: Canadian businesses are optimistic about their growth potential in the next five years, but most firms are seeking growth in their status quo markets and business lines. The report asks, “How will they attain the strong growth they’re looking for?”
Sarah Reid is a freelance writer based in Toronto.