Updated 2.04pm

The majority of local family businesses do not have a written succession plan, a new survey has indicated.

Many family businesses also lack a strategic plan, the research indicated. 

The survey interviewed around 120 family businesses in November and December 2022 and found that 65 per cent do not have a written succession plan. 

A succession plan is a process of identifying and developing potential future leaders for the business. 

A similar percentage, 67 per cent, do not have a written strategic plan that is regularly reviewed, although only 17 per cent of those surveyed believe they do not need one. 

Most businesses surveyed - 83 per cent - have a functioning board of directors that meets regularly to plan the present and future. 

The survey was commissioned by the Family Business Committee within the Malta Chamber, along with the Family Business Office, and the findings were presented during a seminar on Wednesday. 

Its main aim was to identify the challenges local family businesses face and what areas they must prioritise to become more professional and competitive. 

It is not known how statistically significant the survey is, as no statistics exist to quantify the number of family businesses in Malta. A Malta Chamber spokesperson said that they believe the survey gives a "strong indication of the prevailing reality within the family business community."

The survey found a significant crossover between family businesses' various shortcomings. 

Almost all the family businesses without a board of directors, 95 per cent, also did not have a written strategic plan. And among family businesses without a strategic plan, 73 per cent also did not have a written strategic plan. 

The results were presented by Silvan Mifsud, the chairperson of the Malta Chamber Family Business Committee. 

“It’s important for family businesses to keep in mind what made the successful today, will not necessarily mean it will make them successful in the future,” he said. 

“Repeating the recipe that made you successful in the past will not happen again now. Change is happening at a rapid speed and family businesses must be ready to face these challenges and the change that comes with it.”

Family businesses include the involvement of various family members in one way or another in the operation of the business. 

What other findings were presented in the survey?

Speaking during the presentation, Mifsud said in the past three years, businesses, especially family businesses have experienced a wave of challenges and changes in the market. 

He pointed out that in the past three years alone businesses have experienced a pandemic, market disruptions, and the start of a war that is still ongoing. 

He said one of the important tools for businesses is good governance and the importance of having a functioning board of directors to discuss the direction of the family business. 

“One in every five businesses do not have a board of directors,” he said, pointing out how 17% of family businesses have no functioning board of directors. 

When these businesses were asked how the family business goes about taking strategic decisions for the future, there were situations where just one director takes decisions, or discussions are held when matters arise. 

“One of the most important elements a family business must have to continue moving forward is resilience,” Mifsud said. 

What are the priorities of family businesses?

The results show that the number one priority of these businesses is to retain their present labour force, followed by regularly reporting their financial performance. 

“So that means the top priorities are human resources, finances and the internal structure of the business,” Mifsud said. 

“All elements which reflect the ‘here and now’ but very little on the future of the business.”

He said it was concerning that family businesses did not prioritise as much in the training and reskilling of their employees, or increasing collaboration with other companies, even competition. 

259 family businesses registered 

Speaking during the conference, Enterprise Minister Miriam Dalli said Maltese family businesses have been the "backbone" of the Maltese economy for years. 

"There are around 259 family businesses registered, but most likely there are many more in our society," she said. 

She said with the aid of the Malta Chamber and government, support for local family businesses will be strengthened, especially when it comes to long-term planning for the business. 

Malta Chamber President Marisa Xuereb and Joseph Gerada, a regulator at the Family Business Office, also spoke during the seminar.