• Friday, March 29, 2024
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BusinessDay

Nigerian family owned businesses risk continuity on digital apathy

THE GIFT OF FAMILY

Despite the increased need for the adoption of technological and digital advancement in the business environment, many Family-Owned Businesses (FOB) in Nigeria are yet to grasp the ideology, which may threaten the sustainability of these businesses, according to PricewaterhouseCoopers’ (PwC) Family Business Survey 2021.

The 10th edition of the survey themed “from trust to impact; Why family businesses need to act now to ensure their legacy tomorrow,” revealed that despite the resilience these businesses showed during the COVID-19 pandemic, however, the low drive for digitalization and technological advancement may dampen the resilience going forward.

“The global pandemic eliminated the doubts about the need for digital transformation in businesses, as those which had strengthened their digital capabilities fared better than others who were just finding a way to cope with the new reality,” the report stated.

Furthermore, concerns are raised about their digital capacity with almost 60 percent lacking strong digital competence, and only 16 percent strongly upholding and prioritizing digital prowess. In addition, FOBs in Nigeria prioritize business expansion and diversification activities over digital and technological transformation, which is an essential tool for sustainability.

Forty-one percent of the businesses that prioritised digital proficiency fall between the third and fourth generation, while the succeeding generation has grown their digital awareness and adoption to 46 percent.

“The ability of businesses to adapt to digital evolution will determine their longevity, therefore, openness to digital adoption, investment in emerging technologies, and collaboration with tech giants will support the growth of family-owned businesses in Nigeria,” it added.

As a recommendation, the report advised as the world is changing, family businesses need to adopt new strategies to thrive which starts with replacing their mechanical processes with digital solutions.

“With different digital solution providers in Nigeria, family businesses can utilize low-cost, efficient business solutions like mobile applications, HR software, digital marketing, and customer-friendly websites to grow their businesses,” it stated.

FOBs globally account for over 30 percent of companies with sales over $1 billion, furthermore, the largest 750 alone have combined revenues of $9 trillion annually and employ over 30 million people, hence they are essential to the success of the global economy according to the report.

Following the disruptions occasioned by the COVID-19 pandemic, the report encouraged FOBs to adopt research, innovation, and business expansion ideas to further improve its catalytic effect on the economy, help in boosting its longevity while effectively managing emerging risk going forward.

“One of the big lessons from the Covid-19 pandemic for businesses, in general, is the need to diversify business activities to reduce overall revenue risk. Family businesses that are focused on only one or two products/activities must explore new business services that are appealing to the market place” it said.

The report added that family businesses must remodel their business process by seeking innovative ways to deliver customer satisfaction despite consumer’s changing preference, they must also invest in product and market research is paramount from conceptualization to production stage, to ensure the needs of the new markets are met while developing new products.

PwC’s family business survey is carried out exploring the trends and pulse of family-owned businesses, taking into consideration business values, purpose, performance, challenges, and preparations for the future.

Published biennially, the 2021 edition surveyed 2,801 family business leaders across 87 countries including Nigeria, and across various sectors from agriculture to technology.