If you think about the future of your family business and the direction it is taking, it is important to ask yourself a number of serious questions.
The most important questions concerning growth are:
- How do we achieve growth?
- How do we control the growth?
- How do we know when and how to adapt the business in order to keep pace with the growth?
When formulating a growth plan, a number of things are important, especially for family businesses:
- Are all family members in agreement with the growth strategy? If not, how can we ensure that they support us?
- Have we incorporated sufficient (or too much) outside influence in our growth strategy, so we are sure that we have made the most of our opportunities?
- How should we include non-family members in our plans?
- Should we review our existing succession plan and family charter to account for our growth strategy?
Increasing profit is certainly not the worst reason for wanting to grow, but in most cases it is not necessarily the best or most important reason. The larger the business, the greater the chances of increased complexity and increased costs, resulting in an inevitable loss of control. This will especially be keenly felt in a family business.
Most businesses grow organically. When you start from scratch, however, it may take a lot of time and effort to gain a foothold in your market.
Companies with a strong brand have a head start, but they also have to work hard to safeguard the continuity of their business. Another way of achieving growth is by means of acquisitions, thus by taking over an existing company to complement your own business.
Whichever path you choose, to realize sustainable growth it is crucial that you understand the market and gather the right people around you in order to create a business plan and supply the products and services that the market requires. Subsequently, it is essential that you have the right systems, processes and control mechanisms in place to support growth.
In a growing business, the day-to-day management should perform regular evaluations to ensure that the business can continue to fulfill its objectives. Based on this evaluation, often with the aid of an external review, a plan can be formulated for future growth.
In order to determine when a growing business needs to be adapted, it is important that you have access to both benchmark data about your competitors and other market data.
How can we be of assistance to you?
KPMG has interdisciplinary teams that can help you develop a growth strategy and ensure its effective implementation.
- Corporate Finance advice – for example, strategic advice and services in the field of deal management during acquisition, sale, mergers and acquisitions, private equity strategies, valuations and fairness statements, structured financing and leveraged financing.
- Transaction Services support – due diligence for transactions, including acquisition, sale, refinancing and initial public offerings.
- Tax advice – how to structure transactions in the most tax-effective manner, advice on the tax consequences of the various alternatives (corporate income tax, payroll tax and social security contributions, VAT and personal income tax).
- Restructuring advice – we have a restructuring team that meets regularly with companies to examine how the cash flow and working capital can be increased, so that resources can be made available to implement the growth strategy.
We can also advise on international expansion and government grants. We can inform you about the many government subsidies and support programs available, so that you can start exporting, enter into joint ventures or open a branch abroad.
- Valuations – we can assist you with valuations for transactions, irrespective of whether you are the buyer or the seller.
Our services are very useful for achieving and managing growth, but in our experience family businesses can only grow if the family component is effectively included in the policies. Otherwise, the growth may be hampered or even decrease. The success of your growth strategy is also dependent upon important issues such as succession, ownership and governance of both the family and the business.