Family businesses, put your home in order

SILVAN MIFSUD, CHAIRPERSON FAMILY BUSINESS COMMITTEE AT THE MALTA CHAMBER

‘Put Your Home in Order' was the title chosen by the Family Business Committee within the Malta Chamber with regards to free extensive training provided to Family Businesses in 2022. This training was offered for a very particular reason – the time where Family Businesses can be run unprofessionally and still prosper and grow are long over. I repeat, they are long over! The indications are clear for everyone wanting to see them – from a challenging external environment, to fast changing consumer preferences, to ever stringent regulation that is putting the bar up for everyone, like banks and the requirements they have, all means that family businesses need to shape up if they want to remain in business. So, if you haven’t followed this training yet please do so as recordings are still available on the YouTube channel of the Malta Chamber.

Taking the pulse of various family businesses, it seems very likely that come 2023, many family businesses will be involved in digitalising. Many family businesses are realising that they need to become more efficient and make up for the fact that the present tight labour market means that they need to gain efficiencies without relying on

70% of family businesses do not have a written Strategic Plan which is regularly updated.

That adding or have independent nonexecutive directors on the Board of Directors is the second lowest priority for the family business.

This clearly indicates that many family businesses still need to shape up when it comes to corporate governance and the needed strategic direction that family businesses need to have. Many family businesses, keep making the cardinal mistake of getting engulfed in their daily operations without giving much priority to the governance and strategic direction of their business. Such a modus operandi will not deliver the bacon in the current realities.

A third area where family businesses need to focus upon in 2023 is training. Now more than ever family businesses need trained employees and especially middle management, that can execute successfully strategic plans and achieve clear objectives. When I say training, I am not just referring to training related to technical skills, but much more than that, I am referring to training related to leadership, communication, delegation, teamwork and prioritisation skills, amongst others.

In essence, family businesses need to shape up. They need to become more professional, more strategic, review business models, training to upskill staff, get leaner and reduce costs by investing in digitalisation and sustainability. After all, Malta’s economic growth is forecasted to slowdown in 2023 (from 6% in 2022 to around 3% in 2023) and so only the fittest family businesses will be poised to perform well in such an environment. n

new human resources. However, one word of warning. The most common mistake in any digital transformation project, is when such a project is based on the belief that it is only and exclusively related to investing or buying new technology, without going through the extremely important process as to how this digital transformation will require the business to reinvent itself or at least rethink how it will change the way it goes about doing business, and hence reviewing its internal processes. Not doing so is likely to lead to a failed digital transformation project.

Another area where family businesses urgently need to shape up in 2023, is governance. Towards the end of 2022 the Family Business Committee within Malta Chamber, together with the Family Business Office, carried out an extensive survey research with family businesses. An event in Q1 2023 is being planned to divulge the full results and insights from this survey. However, I will provide a sneak preview of these results that shed some light on the governance situation in family businesses. It transpires that: 20% of family businesses operate without a functioning Board of Directors that meets regularly.

“20% of family business operate without a functioning Board of Directors that meets regularly. 70% of family business do not have a written Strategic Plan which is regularly updated."