One of the standout panel sessions, Business Through the Ages: Taking Over Family Businesses, discussed the role of entrepreneurship in family businesses, delved into the complexities of managing close familial bonds while maintaining a professional approach to the business, and why they are still relevant today.
Family businesses in the UAE make up more than 70 per cent of the private sector, and their longevity and continued relevance are largely due to the role of entrepreneurship within these organisations. This was discussed by the expert panelists - led by moderator Farida F El Agamy, Co-Founder and CEO of Kyma and General Manager of the Tharawat Family Business Forum - and featuring Abeer Al Shaali, Deputy Managing Director of Gulf Craft; Ali Sajwani, Managing Director of Damac Properties; Haleema Al Owais, CEO of Sultan Bin Ali Al Owais Real Estate; and Adil Al Zarooni, CEO of Alzarooni Emirates Investments.
The group started out by illustrating what sets family businesses apart from regular establishments. “One of the ways in which family businesses often operate is that we are involved in the larger, strategic thinking as well as the smaller, day-to-day details of running them. You zoom out and zoom in to the macro and micro aspects of the businesses, keeping you very grounded in reality,” said Al Shaali.
“The key to family businesses is not losing the entrepreneurial spirit,” said Sajwani. “My father is the founder and I’m the second generation, and although it’s a large group with different segments, it’s still very much run in the spirit and manner of a family business. We have small, special task-forces to oversee the different units, so you don’t have the bureaucracy that you have with large companies.”
“The global statistics of the last 200 years say that nine out of 10 businesses fail in the first three years. This also highlights the power of family business, because they are the ones that have made it. In their DNA, they have a good set of capabilities, to succeed better than others, and a wealth of knowledge and experience that start-ups can use,” said Al Zarooni.
With the question of carrying through the vision and legacy of the family business to the next generations always looming large, the panel’s generational entrepreneurs believe this can be tackled in different ways. “When my father passed away, we had to imagine his vision and try to create and consolidate that for the businesses,” said Al Owais. “Today, my brother and I are trying to mold the next generation of caretakers and creators for our business, it’s an ongoing project.”
“There’s no better teacher than your father,” said Sajwani. “In the beginning, there’s a big gap in thinking, with the older generation feeling ‘who’s this kid coming in and giving me advice’ and the younger generation thinking the older ones have outdated thinking. The trick is not to start out entitled because it’s your family’s business. If you don’t perform, you’re out regardless, so it teaches you the hard way. The trick is to look for the gaps in the business and treat them as a start-up and try to monetise them. In that way, family businesses are no different from start-ups.”
Al Zarooni says the key lies in how the business is structured. “Structure your governance using a democratic approach where the next head of family is a father figure,” he said. “Always try to sort out the clash between old and new. If the new generation comes in with ideas, trying to fit them into the old guard, take all of those and implement it in a new set-up or business, away from the main arm, let it go through a few cycles of company building and venture building, and possible failure. After a few years, the new generation will be better able to value-add to the main business.”
As far as risk-taking and rewards go, family businesses are dominated by or susceptible to the same influences as other ventures, the panelists point out. “Big gaps exist in the thinking of the start-up ecosystem,” said Sajwani. “Even those of us who are part of big family-run businesses have our own ventures on the side which we run as start-ups. Work hard, do your homework and make sure you’re very quick, or your neighbour will have grabbed that opportunity. Don’t be afraid of failing but learn from your mistakes to implement in your next venture.”
“Make sure there is a demand for your venture, and do your due diligence. Before starting the business, spend a year or three studying the demographic. Don’t make one failed business after the other because you didn’t do your research,” advised Al Owais.
“Learn from companies that have survived the big phase of change. At the heart of everything is value and purpose. Why do we exist?” said Al Shaali. “Put value into your venture, be accessible to your clients and employees and think about longevity. Build with an eye towards the future and not with an eye on the cash cow.”
“The core of any business venture must be that it resolves a problem or a gap,” added Al Zarooni. “Stay away from ideas that are hyped. Just because a lot of people are talking about it doesn’t mean it’s an actual viable concept.”
With valuable insights and strategies for navigating the unique challenges of a family business and ensuring a sustainable future, SEF 2022 will continue to have multiple intensive sessions sharing ideas and best practices among a community of entrepreneurs and leaders.
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