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Euro crisis “has been good” for German family businesses

Most mid-sized family businesses in Germany have not been affected by the ongoing eurozone crisis and are instead looking to hire new employees and boost investment.
Euro crisis "has been good" for German family businesses

Most mid-sized family businesses in Germany have not been affected by the ongoing eurozone crisis and are instead looking to hire new employees and boost investment.

That’s according to Frank Wallau of the Institute for Small Business Research in Germany, and author of a new study that looked at around 400 family-run companies in the country turning over more than €50 million.

“At the moment, family businesses haven’t seen any big decrease in their turnover. In fact, the euro crisis has been good – companies can’t export much to European countries but with a weak euro, there is cheaper export to the US and China,” Wallau told CampdenFB.

The study, which was commissioned by the Federation of German Industry and Deutsche Bank, found that nearly 50% of respondents were investing more into the business and focusing on innovation. “They want top-level products and high-quality employees – that has been the priority since the end of 2009,” said Wallau.

More than 70% of German family companies said it was “highly important” to professionalise management of the company, while 38% of the respondents had a constitution in place to avoid family conflicts.

The survey also found that businesses in the industrial sector allocated 4.3% of their turnover to internal research, while family businesses “such as Aldi and Lidl, which are in the retail sector, are not that innovative and don’t do much research”, said Wallau.

But longevity is definitely a factor, he reckons. “A family business in Germany now will [continue to be] a family business in the next 20 or 30 years. [That is because German families] prefer to own and manage the business with family members.”

The ownership structure may not always work, he said, citing the example of privately owned Schlecker, the German drugstore chain that recently filed for bankruptcy. “It could happen to anybody if they don’t have the right strategy.”

But he added that many small family-owned companies – those turning over around €20 million or €30 million – are likely to increase their revenues over the next two years.

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