Covid-19, business lessons and make use of them for a prosperous future for all

March 18, 2022 Thandisizwe Mgudlwa Analysis In the hour of preparing to transition from Covid-19 lockdowns South Africa, African and other developing economies would do well to pay attention to the Family Business model. In the10thPrice Waterhouse Coopers (PwC) Global Family Business Survey, reveals the current thinking, and future outlook of 2801 family business leaders across 87 territories. The findings show that it’s no longer enough to rely on values and legacy to propel the business forward. Tomorrow’s family business requires a new approach for lasting success — one based on accelerated digital transformation, prioritization of sustainability goals and professional family governance. And in the previous Family Business Surveys, the future of the family business model has proved to be a viable solution for various economies globally. Consisting of interviews on firms approaching their first generational transition, the research also focuses on those groups that can measure their longevity in centuries. According to Pwc, key issues stay constant every year, but with some changes to these. “We’ve talked to founders, next gens, and professional CEOs. We discussed global megatrends such as digital and globalisation, and the challenges of ‘keeping it in the family. In 2012, the dominant themes were skills, scale and succession. By 2014, this evolved to a focus on the need to professionalise both the business and the family. This agenda is far from complete, though progress is being made. In later years, the shift was perhaps more fundamental: from the short term and tactical, to the medium term and strategic. The studies also revealed that the challenge is in the middle, is having a strategic plan that links where the business is now to the long term and where it could be. “This is what we are referring to as the ‘missing middle’.” In addition, the reports highlighted that family firms are ambitious: “They want to grow and ensure the long-term success of their business, but it is clear that many of the issues they face derive from a lack of strategic planning. Some are doing this, and doing it well, but in our experience, a much higher proportion are so absorbed in the everyday that longer-term planning is neglected. Family firms may lack the skills to develop such a plan and some may assume that ‘thinking in generations’ means that the medium term will somehow look after itself.” Moreover, family firms remain a vital part of economies across the world contributing the bulk of GDP in many territories. “We’re committed to working with family firms and helping them make an even bigger contribution to growth and prosperity.” Recent global business research shows that almost half of entrepreneurs come from family run businesses highlighting that the spirit of entrepreneurship still lies at the heart of many family businesses. “If family businesses want to get to the sweet spot where competence and ethics converge, it requires a change of mindset, a rethinking of their priorities and behaviours and a new definition of legacy,” says Peter Englisch, Global Family Business Leader, Partner, PwC Germany. Nicholas Oughtred, chairman, William Jackson Food Group, foodand drinks manufacturer and supplier, UK explains the dynamics of lockdown: “We had three principles to get us through the crisis: to look after our people, to preserve cash and to build a better business for the future. Some parts of the business doubled overnight, while other parts, such as restaurant supplies, disappeared. I feel a great sense of pride in how we helped the community, delivering food to people who couldn’t get to the shops and helping those in need.” Now, in looking beyond COVID-19, almost half (46%) of family businesses expect sales to decline. But 86% anticipate a return to pre-pandemic growth rates by 2022, an impressive level of optimism given that no vaccines had been approved when the survey was conducted, notes PWC, not surprisingly, the impact of COVID-19 on sales is uneven across sectors. Eighty-four percent of those in hospitality and leisure, the highest proportion of any sector, expect a contraction, followed by 64% in automotive and 63% in entertainment and media. On resilience, only one-third (34%) of surveyed businesses have had to cut dividends, and 31% of family members have taken salary cuts. Overall, only one in five businesses (21%) needed to access extra capital; 15% of the owners are putting in more of their own cash, and a further 23% say they are prepared to do so if necessary. Moreover, family businesses are especially important in Middle Eastern economies, contributing 60% to GDP and employing over 80% of the workforce. Many of the region’s largest companies are family-controlled, and in a sector like retail, some of the biggest Western brands are actually managed as franchise operations by local family firms. The Seddiqi family for example, has built its own successful legacy and brand; Ahmed Seddiqi & Sons has a reputation as a trusted destination for luxury watches and jewellery in the Middle East, representing more than 60 luxury timepiece brands across 65 locations in the UAE. The company was originally founded in the late 1940s, and four generations later, is still owned and run by the family, with new ventures in education, healthcare, services, and real estate co-ordinated through a holding company. Osama Ibrahim Seddiqi is CFO of Seddiqi Holding, and first got involved in the family firm during school vacations, working as a sales assistant. He recently shared, “This is where I learned one of the secrets of our family’s success: we treat our customers as long-term friends, not just one-off clients. That’s as important now as it was in the 1950s. That’s why I sometimes make a point of delivering some of the client’s timepieces. That’s part of our culture.” However, Osama didn’t go straight into the family firm. In fact, he followed a carefully thought-out career plan, beginning with a baccalaureate in Dubai, followed by a degree in Business Administration in Denver, and several years’ experience with the National Bank of Dubai. “This allowed me to develop all the specific skills I needed to take on a senior finance role in my family’s company, and I now sit on Seddiqi Holdings executive committee and Board of Directors. We currently have ten family members actively involved in the day-to-day operations of the business, but we recognise the value of bringing in skilled professionals from outside, and there are many in senior management or C-suite roles.” We can take the time to further study these exceptional family business lessons and make use of them for a prosperous future for all. We can not afford to ignore the lessons. Share twitter facebook linkedin Thandisizwe Mgudlwa