Managing risk in family-owned businesses
A small outfit with humble beginnings often comes to mind when one thinks of family-owned businesses. The reality, however, is that family-owned businesses claim a significant share of the global economy, and they dominate the business landscape across both developed and developing markets. They are major contributors to both employment and gross domestic product, accounting for over 50% of both of these in many markets, and range from micro-enterprises to some of the largest listed companies in the world. They are said to be the second-biggest employers globally, next to governments.
In East Africa, the economy is significantly fuelled by family-owned businesses, which account for over 60% of total employment. Some reports indicate that a few well-coordinated family-owned businesses control a relatively substantial part of the economy. These businesses generate wealth for owners while providing much-needed jobs, facilitating the availability of goods and services, supporting large businesses’ supply chains, contributing a significant portion of taxes to the government, and more. The economy, therefore, depends on the continuity and success of family-owned businesses.
“Industrial manufacturing comprises the largest concentration of family-owned businesses across the region, at 22% of the leading 500 firms, and is the largest single sector in Ethiopia, Kenya and Uganda. Food and beverages come next at 16%, followed closely by agriculture with 12%. Construction is the final sector with a double-digit concentration, with just over 11% of family-owned businesses.”
—Asoko Insight
Despite their inherent strengths and global economic significance, family-owned businesses face unique vulnerabilities, which need to be timely identified and addressed, in order to build resilient businesses.
“The importance of setting up and operationalising a risk management framework or strategy for any business cannot be over-emphasised. Family-owned businesses are no exception, especially given the unique risk culture observed in such a setup.”– Willie Oelofse, Head of Adili Risk Advisory
Proper identification, assessment and control (treatment) of risks and their impacts on the organisation and its key stakeholders is an essential part of any organisation. It is also necessary to formulate an effective strategy for business continuity and growth.
Your Risk Advisor should understand the unique characteristics of family-owned businesses and help to drive growth, capital, and wealth potential while protecting your legacy.
“Family-owned businesses need unique programs focusing on governance, risk and compliance, and building practical and strategic controls around prevention, detection and deterrence of enterprise risks.” – Jeremy Muyela, Director-Adili Risk Advisory Services
Our tailored solutions on risk management for family-owned businesses is aimed at empowering businesses to thrive. We apply our unique set of skills to offer a customised approach that addresses the challenges and pain points specifically faced by family-owned businesses. Talk to us via: info@staging.adili.africa
