Sustaining the growth and profitability of the family enterprise is increasingly challenging in the face of a rapidly changing market environment driven by technology and disruption. It is also increasingly important as the family grows and the profit is shared among family members.
Leading families navigate these issues by executing a growth strategy that takes into account both the broader capabilities of the organization and changing family circumstances.
What EY can do for you
Growth and innovation are critical to the sustained success of a family enterprise, yet achieving them can be a challenge. Expressions such as “shirt sleeves to shirt sleeves in three generations” are common across all cultures, and only about 3% of family enterprises survive past the third generation.
The family enterprise faces the same pressures as any other business — including increased competition, changing economic conditions, technological advances, and political and regulatory risks. In addition, family enterprises face a set of unique pressures that can affect growth and innovation.
One challenge for a family enterprise is how to foster entrepreneurial spirit among successive generations of family members as the enterprise matures. Without this, an enterprise can stagnate and the family’s wealth will diminish over time. Another challenge is balancing the need for growth with the owners’ need for income and capital. As the number of family owners grows, profits that could be used to fund the growth of the enterprise can be diverted to satisfy the financial demands of family members. Ensuring that family members are able to contribute to the commercial success of the enterprise is a further challenge.
We have a wealth of experience in working with family enterprises to support them in realizing their ambition and manage both external and internal challenges.
Focus areas (EY 7 Drivers of Growth)
Drawing on our experience, insights, global resources and industry capabilities. We’ve developed the EY 7 Drivers of Growth to provide a framework for achieving growth and fostering innovation.
These drivers are:
- People, behaviors and culture
- Digital, technology and analytics
- Funding and finance
- Transactions and alliances
Each of these forms part of the framework to help family enterprises ensure that their capabilities are aligned to their growth strategy. By focusing on these 7 Drivers and developing a broad set of capabilities, a family enterprise can unlock its ambition of accelerated and sustainable growth.
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