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Family businesses 'a major growth driver'

Manama, April 19, 2012

Family businesses will increasingly be the backbone and a major driver of growth, with a huge capacity to create employment across the Middle East and Europe, a report said.

These were among the findings of a major European and Middle East business survey which provide interesting insights into priorities of family business leaders.

The survey, by global audit, tax and advisory firm KPMG incorporated feedback from 700 family business companies across 31 European and Middle Eastern countries.

KPMG in Bahrain's partner and head of Middle Markets in Middle East and South Asia Harish Gopinath said that unlike the corporate world, family businesses around the world, including Bahrain, have growth firmly on their agenda as they tend to take a longer-term view.

"Perhaps the biggest difference is the emphasis often medium-sized but well-run organisations are placing on three main themes, including preserving cash, growth and changing governance," he said.

The survey revealed that exploiting growth opportunities through successful transactions was a top priority of family businesses.

It also revealed improving cash and working capital management was a priority of 36 per cent of respondents from family businesses compared with 32 per cent as survey average.

"This reflects the high importance many family business leaders place on cash management in uncertain global times, more so since this seems to be a sector that faces a challenge worldwide to receive lending from financial institutions," said Gopinath.

"One of the downsides of being part of a family business is that it is often perceived as having no separation between family and business interests, which can lead to conflicts and key decisions not being taken effectively," he added.

"So in order for family entrepreneurs to play to their strength in the global competitive environment, they will have to adopt an even more professional approach," he said.

For most Bahrain business leaders, 2011 will be remembered for the unrest in February and March, which dampened business and consumer confidence and negatively impacted growth.

In recent months, however, economic activity has increased following a boost in targeted public sector spending, supported by high oil prices and GCC investment.

The government and financial institutions are taking steps to support the private sector, improving access to capital and technical expertise for small and medium enterprises and working with family businesses to ensure the business community operates on a level playing field with the large, publicly-owned corporates. – TradeArabia News Service




Tags: Bahrain | Middle East | KPMG | Employment | Family business |

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