The latest reports from the Family Business Institute reveal that only one in three family businesses in Spain have established a succession plan to ensure generational transition. Companies that belong to this institution present a higher figure (54.7%), compared to 24.2% among those that are not members.
“Family businesses tend to have higher mortality rates than other types of businesses, largely because of the difficulty of managing family dynamics as well as business dynamics, in addition to the conflicts that can arise when trying to pass on control of the business to generations,” explains Ricard Agustín, founder of Family Business Solutions and consultant specializing in family businesses. According to statistics, Only 33% of these businesses manage to be passed on to the second generation, and barely 13% to the third.
The problem lies in the lack of planning for generational change, a topic that many entrepreneurs prefer to avoid because it is an emotional and complex issue. “The outgoing generation wants to secure the family inheritance, but preparation for handing over the reins is often delayed, which can open the door to family conflicts”comments Agustín. However, there is growing awareness of the importance of planning this process and regulating the relationships between family, business and property through the Family Protocol.
This protocol, Agustín emphasizes, must be adapted to each family, with consensus and clarity regarding expectations. “The real success of this document lies in how it is implemented and whether it is used in family and professional decision-making, instead of being forgotten in a drawer,” he concludes.
In the same spirit and in accordance with the report “Inheritance as a guide for the growth of family businesses”Produced by KPMG in collaboration with the STEP Project Global Consortium and the Family Business Institute, the emphasis on legacy varies widely across generations and regions. At the global level, 78% of family businesses in Spain consider legacy a key elementwhile in other countries studied, this figure drops to 53%.
THE silent generation (1925-1945) is distinguished by its emphasis on building a legacy focused on family cohesion. This group considers it essential to strengthen family ties as the basis for the success and continuity of the business.
On the other hand, the baby boom generation (1946-1964) and Generation X (1965-1980) direct their inheritance towards the preservation and transmission of family heritage. Baby boomers emphasize the positive impact of sustainability on inheritance, while Generation X values both financial and sustainability as fundamental pillars.
As for the millennials (1981-1996) and the generation Z (from 1997), the emphasis is on financial performance and commitment to the lineage. Spanish companies, in particular, prioritize these aspects, while globally there is more emphasis on family values as essential elements of heritage.
The report also reveals that companies that strengthen their financial assets and promote social responsibility and succession achieve better results. Worldwide, 45% of family businesses confirm the importance of these aspects, although in Spain the percentage is slightly lower, at 42%.
For its part, the consulting firm Montaner also analyzed the five main challenges that family businesses face during generational change. The firm highlights the importance of aspects such as commitment, innovation and, above all, talent retention, a key issue to ensure the continuity and success of these organizations. Among the most notable challenges, In addition to retaining talent, there is the need to implement a culture of innovation, promote less hierarchical leadership and create a succession plan allowing for a smooth transition.
Inheritance therefore represents one of the great challenges for family businesses, as it not only helps preserve the company’s identity, but also inspires and stimulates innovation. Factors such as entrepreneurship are essential to building a strong legacy that allows new generations to perpetuate the company’s values and purpose.motivating them to adopt the entrepreneurial spirit, the key to sustainable business growth.
Without talent
A worrying 70% of Madrid family businesses report serious difficulties in finding the professional profiles they need, according to the annual economic perception survey carried out by the Association of Family Businesses of Madrid (ADEFAM). In addition, 64% of these companies warn that this lack of talent could jeopardize the viability of their operations in the medium term.
The demand for labor in Madrid’s family sector is mainly focused on three types of profiles: workers specialized in different industrial professions, business developers and engineers. The survey, which ADEFAM carried out at the end of the first half of 2024 among its 115 associated companies, thus reflects a constant lack of qualified personnel. These companies, which represent 7.27% of the GDP of the Community of Madrid, are key elements of the region’s economy.
According to the ADEFAM report, one in five businessmen consider that the expansion of their activity will be their main challenge over the next two years, because it will allow them to better face competition in the market. This challenge is placed above other concerns such as generational change or the generation of new economic activities.
At the macroeconomic level, Madrid’s family businessmen identify several risks that affect the economy. Persistent inflation, lack of reforms, high public debt and rising financing costs are among the main concerns. Concerning the necessary reforms, businessmen underline the importance of reducing regulatory complexity and improving legal certainty, adjusting business taxation, reducing public administration, reducing social security contributions and optimize the education system. Each of these areas received a rating above 8.5 out of 10, highlighting the importance of these changes in driving economic growth.
Finally, the survey reveals that family entrepreneurs strongly identify with the values of “commitment” and “continuity”. These values are fundamental to the culture of the family business, which is characterized by its capacity for adaptation and a long-term strategic vision, qualities which ensure the stability of the productive fabric of the region.
