Family Business Survey 2021 - Singapore findings

From profits to purpose

Time for Singapore family businesses to transition to new growth trajectory

The world is changing and so is the winning formula for long lasting family business success. To thrive in today’s world, Singapore family businesses require a change of mindset, a rethinking of priorities and behaviours, including heightened investment in the digital tools needed for continued economic resilience and more importantly, a new definition of legacy.

Our 10th PwC Global Family Business Survey unearthed the current thinking and future outlook of 2801 family business leaders across 87 territories, of which 80 were from Singapore, representing a diverse mix of businesses and industries. Our findings show it’s no longer enough for family businesses to piggyback on values and legacy to propel the business forward.

Singapore’s family businesses of tomorrow must embrace a new approach, one that is based on accelerated digital transformation, professional family governance and an impending prioritisation of sustainability goals. Indeed, they have been ‘giving back’ to society, but for them to make a positive impact today and ensure a legacy for future generations, alignment of profits with purpose is key. Family business leaders must demonstrate their environmental, social and corporate governance (ESG) credentials with concrete actions. It’s a business imperative today.

For family businesses, the time to act is now.

“The survey results this year aren’t very different from the findings in the previous years. Perhaps that’s worth noting, as it does indicate that family businesses aren’t thinking much differently despite the world of business being set upside down by the pandemic. It’s time for sustainability transformation to take centre stage, even as local family businesses keep their focus on diversification, expansion and digitalisation.”

Ng Siew QuanAsia Pacific Leader, Entrepreneurial and Private Business, PwC Singapore
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Family Business Survey 2021 Launch

Explore key Singapore findings

Ambitious growth expectations for 2022, despite slower growth compared to global counterparts in 2020

Singapore family businesses have seen a mixed performance over the last financial year (pre-Covid-19), with 49% experiencing growth and 21% seeing reduction in sales. This is slightly less positive than the scene globally and in Asia Pacific where the majority of family businesses experienced higher growth (Exhibit 1). More than half the Singapore family businesses (56%) expect reduction in sales due to COVID-19, compared to 48% in APAC and 46% globally.

Exhibit 1: Pre-COVID-19 growth, impact of the pandemic on sales

However, Singapore’s future growth aims are ambitious compared to their global and Asia Pacific counterparts, with 90% expecting growth to surge in 2022 (Exhibit 2). The outlook for 2021 is albeit cautious as 64% of Singapore family businesses expect to see growth, much in line with family businesses in Asia Pacific and worldwide.

Singapore family businesses will need to demonstrate added resilience as they chart their recovery and stay on course to meet their growth targets. Those that will rethink, reconfigure and re-start with new business models aligned with new world dynamics, will be in an optimal position to seize the new opportunities when the global economy reopens.

Exhibit 2: Growth ambitions for 2021 and 2022

It's time to act, now

Our Family Business Survey 2021 report mirrors PwC’s 24th Annual Global CEO Survey findings which revealed a rebound in CEOs’ confidence in global economic growth as well as their own company’s revenue prospects. Singapore respondents in both surveys are seen prioritising investments in digitisation and expansion, but notably to a lesser extent, in climate change.

The overall survey findings are positive, yet it's like a wakeup call for most Singapore family businesses. Their financial resilience may make them well-placed to succeed in the near term, but they must readjust strategies and transform business models to power their post-pandemic recovery and growth in the longer term. Embracing emerging technologies and tighter family governance are key imperatives. Moreover, they must revisit their purpose and chart out concrete action plans to deliver on measurable non-financial impact.

Key considerations for Singapore family businesses

Professionalise your family governance structure

A decade ago, having a family governance structure was a differentiating factor, today it's a business need. A professional governance structure and a clear process for conflict resolution, preferably involving an independent party removes emotional and personal bias, a common stumbling block for business families. Moreover, a written and articulated document comprising the family business’ values helps boost clear communications and transitions. Nearly half (43%) of the family businesses here have no form of governance policy in place and thus, should look towards prioritising efforts on.

Allow external help to mediate conflict when required

Conflict and differences of opinion are inevitable within family businesses, especially when dealing with sensitive issues. But the emotions involved in family discussions can be difficult to resolve internally. While over 80% of Singapore family businesses admit that family conflicts do occur within the business, most of them typically handle and discuss those within the family without using third parties or resolution mechanisms, which may explain why levels of conflict remain high. There are benefits of involving a neutral, outside perspective, where an independent and objective view from a trusted advisor will help in mediating conflict within the family.

Transform digital capabilities by involving NextGen

For many years, our survey has shown that there is more talk about digitalisation than action. Family businesses are aware of the importance for digitalisation but implementation and transformation have been slow. The pandemic revealed that those that had already embarked on their digital journey were better placed during the crisis. The 34% local respondents who are not making digitalisation a priority will stand to face significant challenges in protecting their legacy.

NextGen members are the biggest motivating force for digitalisation. Our global 2019 NextGen Survey revealed younger family members saw technology as one of the three most important drivers of change for the business, and 97% of local NextGens felt this was the area in which they could add value, and push forefront a strategy fit for the digital age.

Prioritise and deliver on ESG

Family businesses need to look beyond philanthropy and embed ESG into their operating models and learn how to measure as well as communicate their ESG agenda to a wider stakeholder group. In addition, having a diverse board, with independent input could act as a good proxy and challenge thinking around sustainability.

The pressure is increasing for all businesses to contribute to a better environment and society. As such, ESG has transformed from a nice feature for a company to have, to an imperative for business success. Local family businesses must start aligning with the Government’s recently announced Singapore Green Plan 2030.

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Ng Siew Quan

Ng Siew Quan

Asia Pacific Leader, Entrepreneurial and Private Business, PwC Singapore

Tel: +65 9726 9880