• Reto Benz, Partner |

Despite increasing protectionism and pending trade wars, two out of three Swiss family businesses feel positive or even very positive about the forthcoming business year. The current European Family Business Barometer shows promising perspectives.

European family businesses are confident for the coming twelve months and would like to become more innovative over the next two years. This is the result of the eighth European Family Business Barometer, published by KPMG in collaboration with the European Family Businesses (EFB) association. The study asked 1,600 family businesses in 27 European countries during summer 2019. In Switzerland, 41 family entrepreneurs participated, providing additional information on core topics, such as digitalization, regulations and the shortage of skilled labor.

Swiss family businesses feel more optimistic

Despite uncertainties on the political future, 61% of all respondents in Switzerland have a positive or even very positive outlook on the coming year. This puts Switzerland in the European average. This positive overall development is heartening. In the previous year, only 46% of the respondents in Switzerland showed this degree of confidence.

The current study shows that family businesses are still building on the strong economic growth of the past. Two out of five Swiss family businesses could thus increase their turnover by up to 50% over the last twelve months. With this result, Switzerland is significantly below the European average (58%), however Swiss family businesses are clearly much more stable. Nearly half of the respondents could maintain their turnover achieved in the previous year.

Investments into innovation is of the highest priority

In order to manage the digital watershed, Swiss SMEs have to get away from product-centric thinking and take the road less traveled. The respondents seem to be well aware of this. 90% of Swiss companies deem it important or even very important to become more innovative over the next two years. Across Europe this figure is even 95%.

In comparison to their European peers, Swiss companies especially stand out for their specific investment plans for the coming business year. 32% of the respondents indicated that they would be investing in innovation and new technologies over the next 12 months. As such, innovation has the highest priority, even before core business (29%) and recruitment (21%). At a European level, only 25% of the respondents indicated that they would be investing in new technologies in the coming year.

Digital transformation as focal point

Most family businesses feel it is important to keep abreast with digital developments and to drive the digital transformation over the next few years in order to make their business more future-proof. It is therefore no surprise that Swiss family enterprises considered digitalization their currently most important challenge, giving it by far more weight than regulations, bureaucracy or the continuous development of their business model.

Every fourth respondent in Switzerland hoped that their digitalization would be followed by new structures and processes. 17% wanted to augment their efficiency through automation and artificial intelligence. The third most important digitalization topic was improving customer orientation with the help of data analysis and personalization (15%).
Many companies get these new competences by recruiting new staff. 40% of Swiss family businesses have increased their headcount over the last 12 months (Europe: 47%).

A more stable legal environment due to the tax reform

The study from the previous year showed that 54% of all Swiss family businesses considered an effective reform of the corporate tax one of their three most important political and regulatory expectations. One of the worries of Swiss family businesses related to a stable legal environment seems to have been mitigated with the clear acceptance of the Federal Act on Tax Reform and AHV Financing (TRAF) this past May. In the current study, 47% of Swiss study participants indicated that regulatory requirements are among their most pressing worries, a value that is clearly below the pan-European one of 60%.

However, both in Switzerland and Europe, there is an increase in regulations, which means that Swiss family businesses need to ramp up their compliance. One of the reasons for this is the digital transformation, which brings forth an increasingly closer linkage between enterprises and their partners, vendors and clients. This is why regulatory topics remain on top of the heap; these have to be monitored closely for new developments so that risks can be recognized early on and necessary remedial measures can be implemented in time.

Download the complete European Family Business Barometer with detailed responses to KPMG’s mood tests of the European family businesses here.

Do you agree with the responses given in the European Family Business Barometer?

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