Family businesses

In his Practical Administration lesson Tareq al-Suwaidan gives figures about family businesses: he says 95 per cent of companies in the Gulf region are family-owned (the latest statistic he cites), and that 68 per cent of family businesses worldwide collapse after the founder dies and his children take over (needs_source: both figures as the speaker gave them, unattributed) ^{1 2}.

He names two main causes: first, that the founder did not train his children enough to run the business, so they inherit an enterprise they do not understand ³. Second — this is his own claim, which we mark as contested — women's intervention in the money side: after the division of the inheritance a daughter holds a share and wants a say while — in his general characterisation, to which he admits exceptions — she has less financial experience than men, so she treats the company as a bank to draw from rather than a firm, and the cash flow is hit until the business collapses (needs_source) ^{4 5}. He adds that of the remaining 32 per cent, those that succeed do so because the father trained his children, or the women did not intervene, or they intervened while trained: a trained woman can run the business competently, and his rule applies to both sexes alike — whoever does not understand the business does not enter it, but either learns it or is content with his or her share ^{6 7}. He adds that the cause of most companies' collapse is not the lack of assets but the lack of cash ⁸.

In the fourth episode al-Suwaidan adds a third cause of family businesses' failure in the second generation — besides those already named — the heirs clinging to the very vision and method their father set, without review or criticism ⁹.