Family-run firms bring stability amid tough times
Reuters file photo
SINGAPORE — Family-run companies play an important role amid economic uncertainty, as they tend to value long-term stability over short-term profitability and are more inclined to retain staff to ride out tough times, business experts said yesterday.
“In this kind of uncertain times, family businesses value stability first before talking about growth and profitability. They also tend to value things like loyalty and trust. So when times are bad, they are not the first to retrench people.
“They will usually try to hang on and ride out the bad times. This helps to create some stability in the country as well,” said Mr Ng Siew Quan, the Asia Pacific Entrepreneurial and Private Clients leader at professional services consultancy PwC Singapore.
He was speaking at the first Family Business Forum held by the Singapore Business Federation (SBF) yesterday.
Noting that family businesses form a large proportion of the small and medium-sized enterprises in Singapore as well as in Asia, SBF chairman Teo Siong Seng said: “They help create jobs, drive innovation and growth, formulate commercial practice and value, and often lead the way in addressing social challenges.”
However, it is also crucial for family-run businesses to have a professional corporate structure, as well as for the current owners to have succession planning in mind, in order to avoid disputes or complications that will hurt family ties when it is time to pass the baton.
“You must actually bring in people who are qualified to do the job, and not just because they have the same surname.
“To professionalise a business, what they (companies) should think of is professionalising the family, and that means having proper constitutions, structures, so that there is a process that can be followed when you transition from one generation to the other,” Mr Ng said.
On succession planning, the founders and owners of the business should plan as early as they can.
“It should be as long as 10 years before the owners plan to step down. Because the earlier you hand over, the better the next generation can benefit from learning from the patriarch and matriarch of the business.
“The easier part is the succession in ownership, while the harder challenge is the succession in leadership,” Mr Ng added. Angela Teng
