Family businesses underpin Turkey’s strong economic growth. That’s in part because family businesses — big and small — account for more than three-quarters of all economic activity in the country.
EY recently compiled a report that looks at the issues and concerns of family businesses in Turkey, and at how the trends affecting them compare with trends in the rest of the world. Here are some of the key findings:
- Growth. According to the EY Global Family Business Survey, family businesses in Turkey have achieved stronger revenue growth than their global counterparts. Out of 50 family businesses surveyed in Turkey, 31% said they achieved revenue growth of between 10% and 15% in the last year; 1 in 3 reported growth of 15% or more.
- Finance. Turkish family businesses are confident about access to finance. They find capital easier to obtain today than it was a few years ago. Bank loans are the number one way to finance growth among local family businesses, with retained profits or earnings the next most popular choice.
- Succession. Most family businesses in Turkey are either in their first or second generation of family control. This means that, despite the desire of the current generation to pass the business on, succession is often not addressed professionally. Where family businesses are more mature — i.e., in transition from the second to the third generation, or further — they tend to have better succession mechanisms in place. Such businesses are rare in Turkey. Also, Turkish family businesses currently consider family governance and management structures as less essential for success than their global counterparts do.
- Talent. Family business owners in Turkey feel that the labor market allows them to attract top talent without excessive effort and with greater ease than their counterparts in the global survey. However, they also realize that, to retain top talent from outside of the family, they must work hard to motivate them to stay. High salaries and bonuses may not guarantee retention; to secure loyalty, offers such as equity participation may be needed.
There is no doubt that Turkey’s family business sector is buoyant. Of course, there are challenges, such as a lack of robust succession planning, and sometimes inadequate governance structures. But as the sector matures, many of these issues will be addressed, and such improvements will only add to the success of family businesses in Turkey.
Metin Canogullari, Family Business Leader, Central and Southern Europe, EY