A new survey by KPMG has found that Irish family businesses are significantly more confident than their European counterparts about the economic outlook for their businesses for the next six months.

The results are published in KPMG’s Family Business Survey for 2015, which compares the views of Irish family businesses with their European equivalents. According to the survey, nine out of ten of Irish businesses are confident about future growth prospects compared with 74% of other Europeans.

In the previous six months:
• 73% of Irish family businesses increased turnover versus 57% of Europeans.
• 65% of Irish family businesses increased staff numbers versus 45% of Europeans.
• 73% of Irish family businesses increased or maintained activities abroad versus 67% of Europeans.

Key Findings

• Access to finance has improved, with 65% experiencing no difficulty in the past six months.
• 69% expect to take on more staff in the next 12 months.
• 65% have hired additional staff and 31% maintained current headcount in the previous six months.
• 77% believe that preparing and training the next generation is crucial for the survival and success of the family business.
• 96% agree that non-family executives bring benefits to family businesses.

KPMG partner Colin O’Brien, (pictured) said: “From an Irish perspective, the results confirm the extent to which access to finance has improved here, which is a positive development. Sentiment is improving and it is encouraging to see that hiring levels are increasing in parallel.

In Association with

“Separately, the effective devaluation of the euro relative to sterling and the US dollar is providing new opportunities for Irish family businesses exporting into the UK and US.”

More Support Needed for Entrepreneurs

O’Brien (pictured) added: “However, certain challenges continue to create issues for entrepreneurs. Budget 2016 provides an opportunity to remedy these issues. Almost three quarters of respondents believe the current Irish tax system has a somewhat or very negative effect on intentions to pass a business down to the next generation.”

KPMG partner Conor O’Brien added: "We need to value entrepreneurship and make sure that those who work hard and take risks are rewarded. We have been very active in encouraging government to take specific measures in this regard. For example we have recommended that Ireland introduce variations of the UK’s Entrepreneurs’ relief, being a 10% rate of tax on capital gains as well as a 10% rate of tax on dividends earned by defined entrepreneurs from their investment in qualifying companies.

"We have also recommended that a CGT rollover relief (similar to the one in the UK) is introduced to allow an individual to defer CGT payable at the standard rate by investing proceeds in a qualifying company - thereby freeing up the pre-tax proceeds for reinvestment."

Olivia Lynch, partner, commented: ‘Strategies around succession planning are essential as entrepreneurship needs nurturing in the next generation and often an adequate plan for the future for all involved is not teased out or implemented.

“This needs to be addressed as it is crucial to prepare and train the next generation to ensure the survival and success of the business into the future. A key issue for Irish entrepreneurs is the high 33% capital gains tax they face when selling on their business. In addition, our tax reliefs on passing on a family business to the next generation are highly complex and can result in material tax liabilities without careful planning and timing," said Lynch, pictured below.

Other significant challenges noted in the survey include:
• Succession planning: 50% do not currently have the next generation in management positions while 73% of Irish family businesses believe that maintaining family control of the business is important or very important;
• Increased competition: 46% cite competitive factors as a major challenge;
• Recruitment: recruiting skilled staff remains a high priority with 31% seeing it as a major issue;
• Selling up: 23% are considering selling their business to a third party while a fifth (19%) are considering appointing a non-family CEO but retaining ownership and control within the family.

KPMG’s 2015 Family Business Survey collected data between 1 May to 5 July 2015 and 1,400 family businesses in Europe took part in the survey.