PwC has released its 11th Global Family Business Survey, entitled Transform to Build Trust, covering over 2,000 family businesses across 82 countries between October 2022 to January 2023.

A new survey by PwC reveals that family businesses have seen the largest growth increase in 15 years, with 43 per cent reporting double-digit sales growth globally in the last financial year, up from 21 per cent in 2021.

Notably, 73 per cent of family businesses that experienced double-digit growth over the last financial year are those with a clear set of family values and an agreed purpose for the business, the firm said in a statement. 

This year’s survey reveals an upward trend in the share of family businesses willing to lead the way in sustainable business practices, the firm continued. Half of firms surveyed with an objective connected to the UN’s Sustainable Development Goals saw double-digit growth during the same period.
 
Family businesses also bounced back after the Covid-19 pandemic, the survey shows. Despite a positive commercial outlook in 2023, the data reveals a disparity between priorities for leaders and focus areas that are typically associated with higher levels of growth. 

As macroeconomic headwinds impact businesses globally, family businesses in 2023 said they are largely committed to protecting the core business, covering costs, and surviving, increasing significantly as a key priority in 2023 rather than pursuing digital capabilities and introducing new products and services, the firm said.

However, nearly 10 per cent more family businesses that have strong digital capabilities experienced double-digit growth in the past year, the survey reveals. 

Peter Englisch, global and EMEA family business leader at PwC, said: “While market pressures and rising costs mean survival is the main priority for family businesses globally, our latest data shows that those family businesses which are focussed on digital transformation and diversity, are reaping the rewards.” 

“Now, more than ever, building competence and achieving strong financial performance are linked to corporate responsibility. The message is clear, for family businesses to survive, they must transform. And that transformation is now,” he added.

ESG
There is also clear evidence that being very advanced in having an agreed and communicated ESG strategy correlates strongly with success and other positive attributes, the firm continued. Half of those surveyed who are very advanced in having an agreed and communicated ESG strategy saw double-digit growth, compared with 42 per cent for family businesses that are not very advanced in this area.
 
Board diversity
Legacy and succession planning are also top-of-mind for family businesses in 2023, with younger and external voices often cited as advocates for change and progression. For example, those adopting digital transformation tend to have more diverse boards, the firm said. In this year’s report, having more than two non-family board members was strongly associated with double-digit growth. These firms also tend to be more advanced in areas such as contributing solutions to society, the environment, and diversity, equity and inclusion, focus areas that were also linked to stronger financial performance. 

Englisch said: “Family businesses are showing they can grow by welcoming change and building trust with digital communication and diverse boards – even in a challenging landscape.”  

Yet one-third of all respondents only have family members on the board, a quarter have no-one from a different industry background, and only 9 per cent are considered diverse, the survey found. Family businesses with board diversity also have a slight advantage of those that do not in terms of reported double-digit growth this year. 

Despite the correlation between delivering on ESG, diversity and trust with customers, only 22 per cent of family businesses globally are currently focused on it, the survey shows. With nearly all respondents considering customers their most essential stakeholder group, and more businesses that are advanced on DEI and ESG strategies experiencing double-digit growth, there is an opportunity for family businesses to gain a competitive advantage in the face of radical disruption and a changing economic landscape, the firm said.