CEBU, Philippines - Majority of the businesses in the Philippines are owned and controlled by families, thus as key driver of the economic growth, experts said family enterprises must be strengthened.
Jonathan Ramos, founder of Premier Family Business Consulting, said a business operated by a family is often exposed to unique and inherent challenges that need to be addressed.
“The advocacy of strengthening families in business lie on the premise that while we, the SMEs are the key drivers of economic development, we will eventually make up the country to be the Tiger Economy of Asia years ahead,” he said during the firm’s advocacy launch on strengthening family businesses on Tuesday.
In Southeast Asia, 65 percent of the total listed firms in the region are family businesses, while 80 percent of Philippine companies are family owned.
Statistics from US-based Family Firm Institute showed that family firms account for two thirds of all businesses around the world; an estimated 70 – 90 percent of global GDP yearly is created by family firms.
Challenges
Family owned enterprises particularly the SMEs are not only faced with business issues, but also with family issues, explained Ramos, who is also wealth adviser of FFI.
“With the inherent tension between the family and business, the business families have to waver through the challenges unique to them,” he said, citing some of these challenges.
The challenge of succession and longevity can be a very daunting stage which mostly poses threats to the continuity of the business.
Managing family dynamics is another challenge as members need to weigh in the positive and negative situations of both family and business matters.
Ramos explained that “poor family dynamics” can result to conflicts that divide the family and “even result to expensive court battles and business closure.”
Other challenges also include estate preservation and balancing family welfare and business growth. “If these challenges are not resolved, the potential of SMEs who are families in business will not be realized. When families in business fail to survive and pass on their businesses to the next generation, it will have serious macro implication.”
Influencing values
The consulting executive also explained the values and culture of members can significantly impact the relationship of one another both in business and family.
“For instance, the values of hard work and perseverance can definitely influence entrepreneurship (in the family),” he added.
When the founder’s success is achieved with these values, the family’s children would naturally be oriented to become entrepreneurs.
Neil Arnold Montesclaros, the company’s executive director and chief operating officer, told The FREEMAN family firms must be organized, and that solutions should be put in place to solve their challenges.
“This is a to encourage them to find more sustainable ways to maintain their position and lay the groundwork to take advantage of the opportunities of a more open market and to help them be prepared as the economy of Southeast Asia changes.”
Montesclaros reiterated the need to have a study on family businesses specifically in Southeast Asia and in the Philippines, saying research in this region is still “very underdeveloped.” (FREEMAN)