In the midst of chaos, there is also opportunity — Sun Tzu
Not much needs to be said about the social, economic, political and environmental turmoil our world is currently going through. It is often easy to forget that, while these are testing times, our world and humanity has been through much worse, and survived — we will again.
We are in a unique moment in modern history. The rise of a great economic power, increasing awareness of environmental challenges and technological advancements that are redefining how people live.
The current global scenario has, in many ways, accelerated trends that were already at play in shaping our world. Entrepreneurs and businesses that are able to harness these trends have the potential to create immense prosperity for themselves and their communities.
European family-owned businesses are both exposed to, and potential beneficiaries of these changes. As new technologies become accessible, the post-war generation starts retiring and a new set of entrepreneurs look at expanding their businesses to Asia and beyond — a unique opportunity is taking shape for these businesses.
Goldilocks moment: Talent, Tech and Capital
There have been massive investments in early-stage technology companies over the past two decades. This has created a pool of tech-savvy digital natives who work, shop and live online. On the other hand, mid and senior management in larger FMCG companies (In Europe and abroad) are increasingly open to roles with smaller companies where they can have more decision-making ability, make an impact and work with new technologies and markets. Channelled appropriately, these pools of talent (both local and international) have the potential to transform traditional FMCG businesses and prepare them for their next phase of growth.
The current global situation has also fundamentally changed how even experienced professionals look at work. Remote working and digital collaboration are now the norm. This will empower greater entrepreneurial activity even in older professionals.
In America those between 55 and 65 are now 65% more likely to start up companies than those between 20 and 34, according to the Kauffman Foundation. In Britain 40% of new founders are over 50, and almost 60% of the over-70s who are still working are self-employed
Business technologies are proliferating and tech companies are desperate to find customers that will use their products and services. Smaller FMCG companies can benefit from access to various technologies from procurement to manufacturing, packaging, distribution and promotion. These can help reduce costs and make them variable (where they were earlier fixed) while providing access to new markets and customers. The global pandemic has made this more visible than ever before, we anticipate rapid growth in the adoption of digital technologies by the Mittelstand going forward. This has also led to a, seemingly, permanent change in consumer habits and propensity to buy online.
Finally, interest rates are the lowest they have ever been and are unlikely to go up given the current world situation. With job creation on their minds, Governments are constantly coming up with ways to support SMEs through cheap debt, tax benefits and growth support.
Bank interest rates on new loans to, and deposits from, euro area corporations [1]
Over the past few months, we have all seen the impact our human actions are having on the planet, the society and our economies. Humanity has gotten a glimpse of how important it is to think long term and build resilient, sustainable institutions and businesses. While many of the largest businesses have been tested to the extreme, long-standing family businesses have been able to sustain through these tough times.
At August One, we are actively engaging with family-owned businesses, Government agencies, Universities and Corporations to identify and support opportunities in Europe. Through supporting Management Buyouts (MBOs), investing in Search Funds and supporting succession triggered acquisitions, we aim to help exceptional entrepreneurs build resilient and sustainable businesses.
We believe that there is a unique opportunity for a new set of entrepreneurs to take on the legacy of family-owned businesses and build for the future. Through the infusion of new talent, efficient technologies and access to new markets, we have the opportunity to help these companies unlock their growth potential and take advantage of the Goldilocks moment that we find ourselves in.
This is the first instalment of our three-part series on family businesses and the opportunity to unlock their potential. To read the first and second instalments, click here and here.
[1] European Central Bank, Interest rate statistics January 2020 data
Comments