Under the Interreg Europe Success Road project, the European Confederation of the Footwear Industry (CEC) and its project partners meet in Vilnius with local public and private stakeholders of Lithuania to discuss succession challenges of family businesses. The meeting was topped off by a visit to the Garlita textile manufacture in the city of Kaunas, Lithuania’s second-largest city and heart of its manufacturing industry.
The three circles of family businesses What is a family company exactly? For the Lithuanian Apparel and Textile Industry Association, family firms are companies where a single family has the ownership and control of management positions. In Europe, they represent more than 60% of all companies and account for nearly 50% of all European private jobs. More specifically, family businesses make up 85% of all firms in Spain, 80% in Greece, and 75% in Italy, Germany, Portugal or France.1 Although striving in numbers, these companies are facing challenges. Lithuanian Family Business Association representative described leadership, succession planning, wealth management, managing family relationships, raising capital and managing transitions and succession to subsequent generations as some of the areas where family businesses might need guidance.
A business-friendly climate for stronger SMEs Given these challenges, stimulating competitiveness and innovation and ensuring smooth transfers of ownerships are key driving principles to address. The potential effects of government legislation on businesses’ success must always be factored in: a well-calibrated regulatory framework can help guide and bolster business in a given region. Lithuania is one such example of a country that means business when it comes to supporting entrepreneurship: the delegate from the Lithuanian Ministry of Economy and Innovation explained that Lithuania has been ranked fourth for the ease of starting business in the EU, fifth in fulfilling ICT business needs globally, and second most attractive destination for manufacturing at global level. The country has taken it upon itself to promote entrepreneurship and these strategic efforts have proved fruitful as five times more start-ups were created in the last five years. Improving the business climate of a region will result in prosperous companies that are more resilient to change, ensuring stable and long-term economic activity and job creation.
Learning from the success of others Project partners had the opportunity to visit the headquarters of the Garlita company. Founded in 2002, the textile company is an example of a family business that has successfully focused on innovation as a way to ensure its long-term competitiveness, whether that means innovation in their products, or innovation in the way they work thanks to the latest technologies. By digitalising all its management, the company’s costs are now reduced and the majority of Garlita’s employees are software engineers and technologists. The owner’s two daughters, already part of the company’s staff, are committed to prolong the success of their father’s legacy.
The consortium will next travel to Poland, where again private and public stakeholders will be gathered for assessing key actions that policy makers envisaged under their “succession package” and analyse what others could be adopted too improve the conditions for family business transfer, which can vary from simply increasing awareness of the relevance of transfer planning, to ensuring appropriate financing conditions or preferential tax treatment.
1 European Family Businesses Association, data available at: http://www.europeanfamilybusinesses.eu/family-businesses/facts-figures
More information at: https://www.interregeurope.eu/successroad/