Thomas Lyons Paul Keogh: The Challenges and Opportunities Facing Family Businesses Today
Irish businessman Paul Keogh has had a diverse career, having delivered beer in Manhattan, worked as a copywriter at JCB, counted Luciano Pavarotti among his clients, and sat on the board of Sunderland Football Club. He has also added writer to his list of accomplishments, authoring ‘The Family Business Book’. This book is a distillation of his wide-ranging commercial education, which has given him a unique perspective on the challenges and opportunities facing family businesses in 2023.
One of the biggest challenges facing family businesses is succession planning. In some countries, as low as 5% of next-generation family members have expressed an interest in running the family business. Families themselves are changing, and the family unit is different from what it was a hundred years ago. Family members are better educated, more global, and less likely to stay in one career for life. This reality has consequences for the traditional family unit. The factors impacting this change in the future of the family unit include families meeting less often as a unit, marriage breakdown on the rise, blended families on the increase, and people having children later in life with fewer children per household.
Keogh believes that family unity may be an increasing challenge, and this will have an effect on the family business. The make-up of entrepreneurs in a decade’s time may well be very different from today and will definitely be more tech-driven. Entrepreneurs today seem more willing to sell their business and reinvent themselves, and there may not be the same emotional attachment to the family business as there was to, say, the family farm. All families are different, some are close, others are distant, but an increasing amount is dysfunctional. This is not good for the future of family businesses.
That said, Keogh believes there will be opportunities for family businesses as well. Families are renowned for their resilience and agility. Many will grow from their traditional base to become global players across many industries. Family businesses can react quickly to opportunities, and there will always be opportunities in good times and bad. The fact of having more support for family businesses today in terms of advice and guidance will benefit.
What may impact the future of family businesses in Ireland is government policy towards family businesses. All sorts of tax breaks and incentives are given to foreign direct investment, but government policy does not favor family business succession.
Family businesses will face a number of challenges in the future, including digital adaptation, globalization, and a drive towards greater sustainability, which are common factors facing all businesses. The real challenges will lie within the family themselves. Will the family values be the same for the next generation? Will families have the same work ethic? Will families be able to manage the turbulent times ahead? You can’t stop the waves, but you can learn to surf. Overall, family members need to communicate a lot more with each other and make sure that their vision of the world is aligned.
Despite the proven resilience of family businesses down the years, keeping a family enterprise intact through the generations is more stressful than that encountered by other companies. Stress in family businesses is greater than other businesses because you are mixing two complex worlds – the world of that family and the world of business. There can be stresses within the family unit, nothing to do with the business, that filter into the business such as divorce.
The pub and hospitality sectors have traditionally accounted for a significant portion of Irish family businesses, but they have unique challenges in the modern economy. The pub and hospitality businesses, as well as construction, farming, and many service-type businesses, have been the bedrock of the economy and were started up in every village in Ireland. What they all have in common is that they are demanding work environments. Young people today are better educated and maybe over-educated. Given the fact that there are 225,000 people in higher education in any one year, a very high percentage of the population gets a third-level education, and this is at the expense of trades as they were once called – the bar trade, the hotel trade, etc. The next generation may not want to work unsociable hours, and with their degrees, they can now travel the world.
Keogh believes the next decade will be key for family businesses, not just in Ireland but all over the world. Their impact will remain the same, contributing over 70% to global GDP. They will become stronger in emerging markets and might slip somewhat in developed countries as developments such as robotics become more widespread. A country like America, where 90% of American businesses are family-owned or controlled, may slip to 75% by the end of the decade, but their contribution will still be enormous.
In conclusion, Keogh says, “It is time we all recognized the importance of family businesses to the Irish economy in good times and especially the bad times. They don’t pack up and move to a new jurisdiction – they stay and fight.”
Family businesses are unique in their challenges and opportunities. Succession planning, family unity, and government policy are just a few of the challenges that family businesses face. However, family businesses are also renowned for their resilience and agility. They can react quickly to opportunities, and there will always be opportunities in good times and bad. It is important to recognize the importance of family businesses to the Irish economy and to support them in good times and bad.
