Family firms here that lack a clear strategy, especially in the digital arena, and have gaps between family and business goals, may face stunted growth, a new report warns.
Market conditions are taking a toll on family businesses in Singapore, with sales growth down to an average 47 per cent this year, from 72 per cent in 2014, according to the PwC report released yesterday.
The biennial global survey of family businesses also found that only 15 per cent of 60 respondents here expected quick and aggressive growth over the next five years, compared with 19 per cent in 2014.
A majority of respondents here, or 62 per cent, predict steady growth, but a lack of proper strategic planning could lead them to nothing, the report said.
PwC warned that "family businesses' growth outlook could be further curtailed by the organisations' own lack of strategic planning rather than economic factors or other external concerns".
Family businesses are now facing many issues, boiling down to not "having a strategic plan that links where the business is at now to the long term".
Average sales growth of Singapore family businesses down in 2016, from 72 per cent in 2014.
Percentage of family firms here which said adding innovation was a top goal over the next five years; the global average is 32 per cent.
Even if they do have such a plan, many firms are "caught between the deluge of everyday issues and the weight of inter-generational expectations".
Findings showed that only 47 per cent of family firms here have a strategy for the "digital age", compared with 53 per cent globally.
Responses here were compared against 2,802 interviewees across 50 economies worldwide.
The report said: "The results are indicative of possible digital denial among local family businesses.
"The lack in their digital and innovation drive is a cause for concern as this is where family businesses can deliver on their ability to reinvent themselves and not lose out in the long-term competition."
And only 12 per cent of family businesses here said adding innovation was a top goal over the next five years, whereas the global average is 32 per cent.
PwC Singapore's Asia-Pacific leader for entrepreneurial and private clients, Mr Ng Siew Quan, said: "Innovation is not a priority as many businesses think of innovation from a perspective of disruptive innovation, which is difficult to implement and execute," he said.
"Instead of placing emphasis on disruptive innovation, family businesses could focus on progressive innovation, which suggests incremental improvements to the business."
He suggested that being progressive can come in the form of introducing new methods, such as being the first to carry out an idea by using intellectual property.
It is also difficult to prepare for the future when family businesses do not have in place enough procedures to manage family conflict, or sufficient succession planning.
Only 57 per cent have at least one mechanism to deal with family conflict, far below the global average of 82 per cent; only 12 per cent have a succession plan for all senior executives; and a large proportion, or 45 per cent, have no succession plan.
Mr Ng said: "There's no point having detailed plans for business continuity if the single most significant risk to this is not addressed. A managed succession process can be a rallying point for the family, allowing it to reinvent itself in response to changing circumstances."