Family businesses are fundamental to the business landscape of the Middle East and are intrinsic to the region’s economy. However, in the latest Deloitte ME Point of View publication, Deloitte experts on Family Businesses point to the growing challenges faced by today’s family businesses, and how they can be overcome.
The article entitled ‘Family Businesses: Addressing the challenges faced in today’s environment’, in the Deloitte ME Point of View issue, says that family businesses are now competing in a more turbulent environment dominated by pluralistic social values, intensified competition, a global economy and rapidly changing politics and regulation.
“The complex relationships that exist between family members and the delicate balancing act required to combine family and work relationships have become great challenges,” Ali Kazimi, Managing Director, International Tax Services at Deloitte Middle East, said.
“There is no one rule that governs all. Every family business is unique, and its identity continues to be shaped over the many family generations,” he added.
Deloitte professionals addressed these challenges in a recent event hosted by the British Business Group in Dubai, where the issues of protecting and investing family business wealth were tackled. Deloitte has also recently set up a dedicated Deloitte Middle East Private Client and Family Office Offering, to provide innovative and wide ranging global tax and wealth planning solutions to family businesses, entrepreneurs and private businesses in the region.
In the Deloitte ME Point of View article ‘Family Businesses: Addressing the challenges faced in today’s environment’, several areas were pointed out as facing family businesses today.
“In today’s competitive marketplace, the old approach does not necessarily work as well as it used to in the past,” Paula Morris, Private Client and Family Office Services leader, Deloitte Middle East, said.
“On the one hand, organizations are increasingly facing increasing challenges requiring a new set of skills to run a successful business model, which are not completely available within the family,” he added.
Morris points to the difficulties that family businesses face trying to attract and retain non-family talent to manage their ventures.
Another major issue is the lack of a proper governance framework, which can negatively impact the ability to control the management of the organization, increases the likelihood of irregularities and can result in inconsistencies in the way business is conducted. Adequate policies, systems and procedures, independent directors at the Board level and a robust financial reporting framework are just some of the elements that family businesses need to have to succeed.
The global economic and political climate makes it more important than ever for family businesses in the Middle East to implement effective planning and governance frameworks. Challenges, both internal and external are becoming ever more prevalent for family businesses. These challenges must be managed and planned for to ensure the prosperity of family-owned entities.