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Mostly run by first generation entrepreneurs, almost all family businesses (FBs) in Bangladesh are expected to grow in the next two years, contributing significantly to the economy's growth story, according to the findings of a survey in the country.
The Pricewaterhouse Coopers (PwC) has conducted the survey.
Interestingly, only 34 per cent of them have a strategic mid-term plan in place.
The survey also indicates that while over 91 per cent of family businesses plan to pass on the reins to their next generation; only 31 per cent of them have an informal succession plan in place.
The findings also reveal that while there is a positive outlook on growth, certain challenges like access to skilled talent, increased competition, disruptive technologies, rising prices of energy and raw materials continue to remain the areas of concern for most family businesses.
These organisations feel the need to accelerate innovation to address some of these challenges and meet global standards.
On the occasion of the launch of the survey findings at a function in Dhaka Wednesday evening, Mamun Rashid, Managing Partner, PwC Bangladesh said, "Family businesses have played a key role in nation building, employment generation and wealth creation in Bangladesh. These businesses have also been instrumental in driving foreign investments into the country. It is crucial that these organisations have a structured succession plan in place to ensure continued growth and help sustain the heightened entrepreneurial activity in the country."
According to the survey, only a fraction of FBs understand specific technologies, with only 19 per cent of them being aware of the implications of going digital, as compared to 30 per cent of family businesses globally. In this case, hiring skilled talent and empowering the next in line family members could lead to a sustainable business model.
Ganesh Raju K, Entrepreneurial and Private Business Leader, PwC India added, "Family businesses globally are at the crossroads. They have to constantly innovate and transform themselves to keep themselves relevant, while holding on to their set of their values, which are at the heart of every such businesses. It's interesting to see that family businesses in Bangladesh are optimistic about the future."
The survey states that 97 per cent of FBs have a clear understanding of values. These have given them a competitive advantage, positive reputation and helped in retaining talent. A strong value system drives growth for family businesses amid disruption fears and the fast-changing geopolitical environment.
Minister of Commerce Tipu Munshi said, "Bangladesh's economy is on a positive growth curve and it is expected to be one of the best performing economies among the developing nations this year. Family businesses in Bangladesh reflect the same growth story. Strategic partnerships, international exposure and adoption of global best practices will help these businesses mature further and drive the economy."
The PwC survey also found that 72 per cent of family businesses in Bangladesh have some form of policy/procedure in place within the business, slightly lower than the global average of 84 per cent.
Besides, 63 per cent of Bangladeshi business families claim that conflict is handled within the immediate family. Only 6.0 per cent use a third-party resolution service, the survey noted.
On an average, women constitute 25 per cent of board members in Bangladeshi family businesses but only 14 per cent of the management team.
Around 78 per cent of the family businesses are engaged in philanthropic activities. However, only 38 per cent try to measure the impact of the social assets they create.