GCC family businesses confident about 2018

Manama : Over half of the family businesses in the Gulf Cooperation Council (GCC) nations are confidents about their prospects for 2018, according to a new survey.  

The “GCC Family Business Survey 2017” by KPMG credits this to the success of the businesses in adapting to the “new norm” of lower oil prices and the impact of geopolitical developments.

The report analyses the thoughts of over 40 senior members of family businesses from the six GCC countries, on trends and issues affecting the sector. 

“Fifty-seven percent of those surveyed suggesting that they are confident about their business’ prospects in the coming 12 months and we can take this sentiment as a positive indicator for the region’s economic conditions,” said Harish Gopinath, Head of Family Business for KPMG in the Middle East and South Asia. 

The survey identified 81pc of the family owned businesses focus on improving profitability and 55 percent on increasing revenue. Nearly half of respondents noted that increased competition (a potential blocker to growth), was a major concern, so it is therefore not surprising that 38 percent are planning to diversify into new products and services and 23 percent were looking to move into new markets. 

Finding the right balance between the interests of the family and that of the business, is clearly a key concern for family businesses – and was reported as important or very important by 77 percent of respondents. Family businesses are increasingly establishing rules, procedures and processes to manage expectations of family members and avoid conflict. 

On this, Gopinath said: “Family businesses appear to be acknowledging this by ensuring that they have the right mechanisms in place, including a formal board of directors (85 percent) and formal advisory boards (22 percent). Interestingly though, only 20 percent of respondents indicated that they have adopted a family council.”

Succession is also at the top-of-mind for most family businesses with 88 percent of respondents noting that training and preparing a successor is crucial for the business’ survival and success. 

Overall, many family businesses within the GCC have enjoyed a strong year and many are taking positive steps to ensure growth and the family’s legacy, the report states.