Family ties weather recession

2011-01-18 14:53

Three-quarters of SA’s family-owned businesses believe family ties helped them through the recession, according to the results of a PwC survey released today.

“More than 75% of South African family business owners believe that being part of a family business helped them through the economic downturn,” PricewaterhouseCoopers said in a statement.

“This was almost 10% higher than the global average, showing the core strength of local family-owned companies compared with their international counterparts.”

PwC said South African family businesses “believe their resilience comes from being better placed to take a longer-term view than their listed counterparts”.

These companies are under less pressure to deliver quarterly results and dividends to shareholders.

“They tend to be more careful about overstretching themselves, and they’re often underpinned by the values of the founding family, as opposed to being managed as purely commercial concerns.

“So they can weather storms that overturn larger and more aggressively managed operations.”

The PwC Family Business Survey 2010/11, Staying in the Game, interviewed more than 1?600 family-business owners and managers in 35 countries, including 81 owners in South Africa.

“Nearly half the executives interviewed reported that demand for their products and services grew in the last 12 months,” said Andries Brink, national leader: Private Company Services, PwC Southern Africa.

However, more than a third said operating profits had fallen, while more than two-thirds were concerned about market conditions.

“Despite the concerns, many plan to expand over the next 12 months.”

Globally, only 32% of family-owned companies increased their capital expenditure over the last year, compared to 50% in 2007.

However, in South Africa, 47% of respondents increased capital expenditure.

“This could be as a result of the Fifa World Cup and the fact that during the survey period South Africa has been less negatively affected by the global economic downturn than other countries.”

More than two-thirds of South African respondents had business plans in place and for additional cash were dependent on bank and overdraft facilities, rather than on retained capital.

Following the global economic crisis, it appeared South African respondents saw business returning to normal.

Only 16% had made significant changes to their business models in the past year, 22% made minor changes, and 62% no changes at all.

“Ironically, family-business owners based in emerging markets are the most likely to have made major changes, whereas those based in North America – where the financial crisis originated – are more likely to have made tweaks,” PwC said.

Regarding internal issues, labour concerned South African executives the most, with 54% ranking it the biggest source of unease. This compares to 34% in the mature markets surveyed.

“Executives in the mature markets are much less worried about labour issues and government policy than those in the emerging markets...”

Instead mature market respondents were more concerned about managing costs and cash flows.

The survey found 64% of South African respondents exported to Africa.

“What is perhaps a bit more difficult to explain is why 56% said they have no plans to expand operations into Africa.”

PwC said some of the reasons for this reluctance could be bureaucratic red tape, unstable currencies, political uncertainties, lack of infrastructure, and language problems.

Join the conversation! encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions. publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24

Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.