Dubai – 15 May 2013– Family businesses in the Middle East have performed well over the last year, with 83 %, reporting growth in sales in the past year, a high in comparison to the 65 % recorded globally. Working towards their ambitious growth targets, 23% of the family businesses in the region said that they are aiming to grow aggressively and quickly over the next five years, says the Family Business Survey conducted by PwC. The results of the survey were revealed today at a panel hosted by Dubai Women Business Council (DBWC) in collaboration with PwC.
Over the last two decades, the role of women in family firms has undergone a paradigm shift. Raised standards of education coupled with improved economic conditions and financial opportunities have resulted in women contributing significantly towards the growth and success of family businesses. The DWBC and PwC joint event was focused on the survey findings highlighting the state of Family Businesses in the region and how women play a critical role in growth of the same.
Family businesses are thriving regionally with sales growth particularly strong in retail, manufacturing and construction sectors. A confident 69% anticipate a steady growth while 23% anticipate quick and aggressive growth. Only a low 9% saw a reduction in sales over the last year, compared to the 19% recorded globally.
Recruitment of skilled staff, succession planning and family politics are some of the key challenges facing family businesses. These are just some of the findings of the latest PwC survey of 65 family business executives across the Middle East and 2000 globally.
Amin Nasser, Partner / Entrepreneurial & Private Clients Leader , PwC Middle East, says: “Our survey clearly shows that family businesses in the Middle East will continue growing significantly. Compared with the rest of the world, family businesses in the Middle East are less fazed by the general economic situation. This has created a strong framework for family businesses to continue targeting ambitious goals, bringing stability to a balanced economy.”
Commenting on the event, Raja Easa Al Gurg, President of Dubai Business Women Council added “There is no denying the fact that the role of women in Family Business has undergone a paradigm shift. Active participation by the female family members in the Family Business has been steadily increasing in the past two decades. With women proving to be excellent leaders with exceptional capabilities, governments and society both are actively looking at ways to promote Women Entrepreneurship”
One of the biggest challenges facing family-owned businesses is the recruitment of skilled staff. More than half say attracting the right skills and talent will be a key challenge over the next five years, and 43% say they will struggle to retain key staff in the same time period. Another 48% found the main challenge to be price competition.
Challenges around succession continue to be front-of-mind, often further compounded by family conflict/politics, and the need to attract and motivate non-family staff. More than the global average, 1 in 5 family businesses in the Middle East think family conflict will be a challenge over the next five years. The survey also revealed that only 42% of family businesses have a shareholders’ agreement in place, and almost a quarter, 23%, currently have no procedures in place to deal with conflict.
The key issues facing family businesses are similar to those in 2010, although government policy has become more of an issue than market conditions. Government policy and regulation are identified as major issues in the Middle East with 46% claiming it to be a key external challenge, whereas 45% claim market conditions to be the key external challenge instead.
Family businesses believe their structure offers significant advantages and benefits – particularly their agility/flexibility, continuity and the longer-term perspective. They cite the key role they play in job creation, the stability they bring to a balanced economy, and their entrepreneurial nature.
A high 74% of family businesses believe the culture and values tend to be stronger in family firms than other businesses. 78% said they do all they can to retain staff even in the bad times, and a similar 78% also agree to have a strong commitment with supporting employment and community initiatives.
The way forward
Family businesses in the Middle East feel quite strongly that governments should make it easier to access finance, although less so than the global average. But the majority of family businesses are convinced their governments could and should do more to help them succeed, with measures such as:
The results of PwC’s Family Business Survey prove that family firms in the Middle East play an important role in the economy. Family businesses believe they hold stronger values than other businesses and this has created a strong, ambitious drive, delivering solid profits.
1. The PwC Family Business Survey 2012 covers family companies with a sales turnover of more than US$5m in over 30 countries including65 from the Middle East. Interviews with top executives in 1,952 companies took place between 7 June and 18 September 2012.
2. The report on the findings of the Family Business Survey 2012 can be downloaded at http://www.pwc.com/fambizsurvey
3. PwC helps organisations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with more than 180,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.
Established in the Middle East for 40 years, PwC has firms in Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Oman, the Palestinian territories, Qatar, Saudi Arabia and the United Arab Emirates, with around 2,700 people. (www.pwc.com/middle-east)
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
© 2012 PricewaterhouseCoopers. All rights reserved.
4. Founded in 2002, DBWC motivates women to be productive members of the society, while encouraging role models to rise up from the ranks and inspire other women around the world, especially in the Arab region, to discover their true potential. DBWC organises the high-profile monthly event ‘Network Majlis’ to provide information about the latest knowledge, skills and best practices for women entrepreneurs and leaders. For more information about recent DBWC activities, log on to the Council’s Facebook page: https://www.facebook.com/pages/Dubai-Business-Woman-Council-DBWC/146645812070341.