When the unprecedented Coronavirus pandemic struck in late 2019 and then proceeded to wreak havoc till date, it disrupted normalcy as we all knew it. Schools closed. Movement and gatherings reduced. Governments imposed curfews and lockdowns. Our health facilities and their capabilities were tested, and economies were brought to their knees. The resulting scenario was nothing if not ugly. Deaths of loved ones. Loss of jobs. The fear of a stubborn virus wiping out humanity, paired with an uncertainty of tomorrow. Businesses were hit hard, and are still counting their losses. Among the businesses that took a hit, are family-owned businesses.
Family-owned businesses are set up by a family and run by the members, parents working to groom their kids to join the business. To understand where family businesses stand after the Covid storm came, PwC unveiled the 2021 East African Family Business Survey, themed “From Trust to Impact”.
96 interviews with family business owners and decision-makers across East Africa were conducted by PwC for this survey. The following insights were drawn from the surveys:
Key statistics on the performance of family businesses in East Africa
- 46% had a spike in growth while 36% reported a drop in sales
• Covid was the major cause of a fall in sales, as 53% of Family Businesses reported. This one is slightly higher compared to global stats that stand at 46%
• East African Family Businesses haven’t lost one thing: optimism. 61% expect growth in 2021, and from 2022 onwards, the optimism takes a spike to the skies, with a 91% growth expectation.
Key priorities of family businesses over the next two years
Successful businesses have one thing in common, and that is their ability to do a full business scan and determine where they were, where they are, and where they aim to get to. With these insights, they then proceed to create a business strategy that will row their boat into new waters of desired excellence.
As it has come out clearly in the survey by PwC, family businesses have their priorities for the next two years set right. They aim to branch out into new markets; conquer uncharted paths and bloom in new business-healthy areas.
Client segmenting also comes up as an eyed priority. The hallmarks of a good segmenting strategy include determining customer segmentation goals; segmenting customers into various groups; going all out to target and reach the specific groups; and then running an in-depth analysis of the results.
Family businesses also shoot to hit an increase in new technologies, improved digital capabilities, and the introduction of new products and services. In addition to this, their think tanks are working around the clock to rethink business models. Change, an inevitable visitor, must show up on the doorstep of businesses. Change either makes or breaks businesses; it is the ability to rethink, adjust and readjust, that determines where a business will stand.
Covid-19 has been a pain point, but what’s the strong point?
PwC’s deep dive with this timely survey has unravelled some strengths of family businesses.
The survey results depict high levels of trust, transparency, and communication in family businesses in East Africa. Just under three-quarters of East African family businesses feel they have a clear sense of deeply engraved company values. It is these values that have helped a greater majority to weather storms, even though only 39% of family businesses have their values and missions written down.
Trust is evident within the family, in their suppliers, customers, and other stakeholders. This unfaltering trust has sustained family businesses during tough times of significant disruption, and it’s a quality other businesses can emulate if they are to rise when the chips are down.
In this regard, Michael Mugasaa, a Partner, and Entrepreneurial and Private Business Leader at PwC remarked, "The strong fundamentals that are the hallmark of family businesses - a commitment to values, long-term thinking, sensible leverage - puts them in a strong position for faster recovery from the pandemic disruptions. More so, because family businesses tend to be trusted businesses and, in most sectors, they are very resilient."
Prioritising sustainability
It was also found that in East Africa, family-owned businesses are slightly more likely to have at least one issue related to sustainability or the local community as a key priority, compared to global respondents. 83% of East African family businesses engage in some form of social responsibility activities. This tends to involve contribution to the local community or traditional forms of philanthropy. Only a quarter (25%) of these businesses have a developed and communicated sustainability strategy. Future intentions are more encouraging though with 64% of East African family businesses saying there is an opportunity for family businesses like theirs to lead the way in sustainable business practices.
Mugasa says, "Sustainability tends to be associated with the environmental aspect of the Environmental, Social and Governance (ESG) agenda, but an organisation’s contributions to society and good governance practices also form parts of the ESG agenda."
Also read: The Importance of Sustainable Development Can No Longer Be Denied or Ignored
Other key areas the survey touches on
- Growth and legacy: Plans, many a time, do not pan out as expected. Family Businesses confess to Covid-19 having demeaned their strategic forecasts. However, they still hold on to impressive optimism that Covid may have shaken everything else, but their legacy remains unscratched. They predict incredible growth after their businesses have been through the wringer; tried and tested by unprecedented challenges.
- Translating ambition into action: The founders of most, if not all, family businesses are well-known and revered. The nation feels the impact of their businesses, rippling far and wide to touch local economies. This is through employment opportunities created and the heaps of money that goes to the government in form of taxes. Going forward, sustainability on this high cloud these businesses sit on will be crucial; if impact and purpose are to be maintained. Even better, if impact and purpose are to increase.
Also read: Kawira Mirero on Taking the Pragmatic Approach to Build a Business
- Getting ahead of the digital curve: More than half of the respondents in this survey said that their jets are set, ready to soar high in the skies of the fourth industrial revolution, also known as the digital age.
- Family dynamics: The survey peels open the reality that in 44% of family businesses, not all family members share similar views about the company’s direction. True to the quote that embraces wordplay: We walk on the same earth but with different shoes; we look at the same things but have different views. However, 72% agreed that family members communicate regularly about the business.
