80% of Spanish Family Businesses Confident of Growth

January 16th, 2014

recoveryAccording to a recent study carried out by KPMG, 80% of Spanish family businesses expect to grow in the next six months, 31% of them abroad, 24% locally, and 25% in both markets.

KPMG prepared the study of Spanish companies in collaboration with local associations linked to the Family Business Institute (Instituto de Empresa Familiar), which encompasses around a thousand companies, with a turnover representing, in aggregate, 27% of the GDP. KPMG also conducted parallel studies in other European countries, with which the Spanish case is compared.

The economic crisis has caused a revenue decline in 44% of the Spanish family businesses and 31% of European family businesses. 25% of the Spanish family firms claim to have created jobs during the past six months, while 37% were forced to reduce their workforce. In Europe, 40% of family businesses report having hired new staff and only 24% had to reduce their workforce in the last six months.

Given this scenario, 74% of the Spanish companies increased their presence abroad, compared with 59% of those belonging to the other EU countries.

With regard to investment, the Spanish and European companies agree that they are continuing to focus on their core business (36% and 48% respectively), while 29% of the Spanish companies and 26% of the European are aiming to internationalise.

Meanwhile, 24% of Spanish family businesses and 17% of Europe’s will attempt to diversify their activities. When considering future investment opportunities, 63% of the Europeans and 53% of the Spanish are looking beyond their home market.

The main destinations for Spanish family businesses are Latin America (22%), Europe (10%) and Asia (7%), while for the average European family business, Asia is the most attractive market, with 16% of the total, after the other European countries, which are preferred by 20%.

El Economista reported that, despite the drop in revenue, one in four Spanish companies have experienced an increase in sales, however still a figure lower than the rest of Europe (46%).

In the analysis of the main problems identified by these businesses, the complications are centred on the fall in turnover due to the decrease in volume and profitability, for 58% and 51% of those questioned, respectively.

Limited access to credit in order to make investments (21%) and for their daily activities (18%) also concerned the Spanish family businesses more than it did the Europeans, which in their case reduced to 17% and 11% respectively.

Furthermore, 61% of Spanish family businesses have had problems with access to finance in the past six months, compared with 51% in Europe. The main consequences are the problems arising in the management of cash for 20% of Spanish and 19% of Europeans, and the difficulties in promoting new investments or in internationalisation (12% and 10% respectively).

As for the reasons that they consider are behind the problems of access to finance, the Spanish companies point to the increase in necessary guarantees (32%) and interest rates (30%). When obtaining financing, the most attractive option for the Spanish company is bank credit (39%), followed by equity (38%), and with regard to the policy changes they would consider most beneficial, the Spanish family company indicates a reduction in taxes and lower social security contributions (75% and 67%), followed by a simplification of labour agreements (58%).

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