Majority of family businesses in the Middle East are targeting growth over the next two years, however, they should consider a new concept amid growing challenges, according to PricewaterhouseCoopers’ (PwC) 2019 Middle East Family Business Survey. The survey indicated that family businesses in the region have always demonstrated a successful track record of growth thanks to an entrepreneurial founding generation and a vision for the future in mind. Though leaders of such companies are still optimistic, this year’s survey finds that growth has been more modest: 53 percent of respondents reported growth last year compared to 74 percent two years ago. PwC Middle East Territory senior partner Hani Ashkar commented on the report saying family businesses in the Middle East have long spearheaded economic growth with significant GDP and employment contributions. However, they are now expected to operate in an environment that is changing more rapidly than ever. “Family businesses are called to enlist their values, loyalty and their commitment to find new ways of operating in a constantly evolving environment.” PwC noted that the economic environment is reported as the key challenge by 78 percent of the respondents. At the same time, traditional challenges that are “pertinent to family businesses around governance, continuity planning, development of the next generation, capability building and the overall professionalization of the business have always been high on the agenda.” When asked to determine top five challenges facing family businesses over the next two years, responders to the survey first named the economic environment, followed by the need to access the right skills with 66 percent, the need to innovate representing 63 percent, the impact of regulations of 63 percent and succession planning of 53 percent. The PwC survey also shows that family businesses are recognizing the need for action to remain competitive and secure their legacy in a digital age. “Forty-seven percent of Middle East family business leaders said they felt vulnerable to cyber-attack – a higher percentage than the 40% globally.” In terms of future planning, 66 percent of respondents are taking significant steps to improve their digital capabilities and 34 percent expect to change their business model, over the next two years. PwC Partner and Middle East Entrepreneurial and Private Business leader Adnan Zaidi noted that the publication aims to be a comprehensive analysis of all current factors impacting the growth of family businesses in the Middle East. It also wants to shed light on the areas PwC believes family business leaders need to address to ensure a sustainable future for their businesses. Interpreting the survey’s results, Zaidi indicated that family business leaders need to address four key areas: First, they need to professionalize their business, establish better corporate governance and organize a succession plan to ensure a smooth generational transition. Secondly, they need to examine with objectivity and efficiency the profitability of their business segments. Mastering both bottom-line profitability and top-line growth is what will distinguish the family business of the future. The third factor is the impact of innovation and digitalization which are undeniable competitive tools – a digital mindset and embracing innovation is more important than ever for business leaders. Finally, a collaborative mindset is essential: Embracing peer-to-peer and public-private collaboration as well as policies that support growth and ensure accountability and transparency on governance can enable sustainability for family businesses. Zaidi concluded that we are in times of rapid transformation and family business leaders cannot afford to remain static and wait for an economic upturn. At the same time, if family businesses prepare adequately to rise to the new challenges and face the future, there are enormous opportunities. “The time to act is now.” PwC’s Family Business senior advisor Amin Nasser indicated that business challenges come on top of traditional family-centric challenges, so family businesses need to tackle all fronts simultaneously. Nasser added that leaders need to also ensure the development of a strong and motivated next generation which is key to a successful transition. “One distinguishing competitive advantage is the values of family businesses. Common ideals that cultivate a sense of duty, belonging, responsibility and a purpose can build a family business DNA that transcends time.” The PwC survey reports that the vast majority, 88 percent, of Middle East family businesses have a clear sense of agreed values and purpose.