Family businesses are central to Middle Eastern economies
Many of us have delighted in purchasing goods or services from family businesses, whether they are industry giants or local mum-and-pop stores in our neighborhoods. Some of today’s leading family businesses once started as visionaries who persevered in actualizing their dreams, such as Samsung, L’Oréal, Nike, Walmart, or Volkswagen.
Family Capital recently published a 2019 survey of the world’s top 750 family businesses, bringing to attention their significance to the global economy. Collectively, they generate $10.3 trillion and employ 33.6 million people worldwide. In the Middle East, family businesses contribute 60 percent to the GDP and employ 80 percent of the workforce, according to PwC. Additionally, an estimated $1 trillion is expected to pass to the next generation within a decade.
Family businesses should be a national priority for governments, considering their influential roles in our economies. Dedicated agencies or units could be established to formulate impactful policies and regulations that assist family businesses in thriving in a competitive market.
Supporting access to funding is imperative for family businesses to start or expand into new sectors or territories. Offering a suite of financing options will be necessary, such as loans, equity capital, and subsidies. Governments should also consider engaging local businesses in public-private partnerships. For example, many of today’s successful family businesses have delivered exceptional value in the fields of healthcare, education, transport, retail, or hospitality.
Several countries have successfully launched schemes that enable family businesses to expand overseas. Support comes in the form of accessing insightful market researches by country, matchmaking with foreign investors, benefitting from tax cuts, guiding companies on how to export products, or availing a comprehensive network of free trade agreements.
In today’s competitive global market, it is imperative for family businesses to be equipped with valuable expertise, skills, and tools — all of which can be accessed via government-led innovation hubs or online learning platforms. Such activities can give birth to value-adding products and services, in addition to ensuring global competitiveness and sustainability.
Furthermore, businesses can access expertise through smart partnerships with industry leaders. Investment in digital technologies will be a key factor in the success of family businesses in the future, as they expedite and improve service delivery, in addition to growing the consumer base and ensuring minimal disruptions.
Like any other business, hiring and retaining the right talents can be transformational. As family businesses possess their own dynamics, leaders can partner with renowned educational institutions to upskill existing talents in the dynamics of family business management. For example, Harvard Business School and the IMD Global Family Business Center have a suite of executive education programs that focus on wealth management, growth strategies, governance models, succession, and conflict management.
Succession planning remains one of the biggest obstacles facing family businesses. Thus, publishing useful guidance on corporate governance structures, succession planning strategies, and conflict resolution management will ensure smooth day-to-day management and transitions from one generation to the next. Appointing a board of directors or a family council is an effective approach adopted by many successful businesses.
Additionally, family business leaders should prepare the next generation for taking over the company by engaging them as early as possible with the vision of the business, its values, and operations. They should also be encouraged to pursue curiosities that lead to breakthroughs, in addition to preserving the family’s legacy and wealth.
By providing family businesses with the necessary support to flourish, we can delight in the positive impacts of their brands for generations to come.
Published in Arab News.
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