The GCC’s family businesses have shown confidence in their prospects for 2018, as they begin to adapt to the “new norm” of lower oil prices and the impact of geopolitical developments, according to KPMG’s recently published “GCC Family Business Survey 2017”. 
The report analyses the thoughts of more than 40 senior members of family businesses from Qatar and the other GCC countries, on trends and issues affecting the sector. 
On the report, Yacoub Hobeika, head (Family Business) KPMG in Qatar, said, “In the GCC, perhaps more than anywhere else world-wide, family businesses form the backbone of the economy. 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.”
The survey identified that for many family business, growth is still high on the agenda, with 81% focusing on improving profitability and 55% on increasing revenue. As family businesses expand through the generations, it is essential that enough profit is generated to distribute to an increasing number of members. 
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% are planning to diversify into new products and services and 23% 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% of respondents. Family businesses are increasingly establishing rules, procedures and processes to manage expectations of family members and avoid conflict. 
On this, Hobeika said, “Good governance is a success factor for growing family businesses, and each organisation requires a unique, fit-for-purpose governance structure that will carry the business into future generations, whilst managing the risks associated with succession and sustainable growth effectively. Family businesses appear to be acknowledging this by ensuring that they have the right mechanisms in place, including a formal board of directors (85%) and formal advisory boards (22%). Interestingly though, only 20% of respondents indicated that they have adopted a family council.”
Whilst the board of directors’ role is to manage the business, the family council resolves and regulates family issues by creating a common set of rules that define the conditions for entering into family ownership, governing bodies or operational positions in the company. Family councils are also responsible for outlining the training and development conditions, and ensuring that there are the required skills, motivations and experiences necessary for business success. They therefore play a pivotal role in ensuring the sustainability of the organisation. 
Succession is also at the top-of-mind for most family businesses with 88% of respondents noting that training and preparing a successor is crucial for the business’ survival and success. With 38% of respondents expecting to pass management over in the coming 12 months and 21% expecting to transfer ownership, Hobeika said, “When there are family members willing to take over the reins, the challenge lies in ensuring a smooth transition for all involved. It is paramount that planning and preparing for a change in management or ownership happens early and in a transparent way to ensure that all affected parties not only understand the implications, but support the change.”
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. Good governance and succession planning will always be critical to family business’ success but it is also important that they continue to keep up to date with competition and advances in technology. 
On this, Hobeika said, “Technology is changing the way that business is done and operating models and service offerings must be reviewed and updated to ensure that they meet customer and staff needs. Similarly, upcoming changes to regulations and the implementation of VAT across the region, could require new or updated systems – and it is better for business to act on this sooner rather than later.”