The Kingdom’s Family Business Center has witnessed a remarkable year-over-year revenue growth last year, with an increase of 198%, soaring from 1.05 million riyals in 2022 to 3.13 million riyals in 2023.
A recent report by the National Center for Family Businesses reveals that family businesses constitute a vast majority of the business sector, accounting for 95% of the operating entities within the Kingdom. These establishments employ 57% of the private sector workforce and account for 48% of the total workforce in the Kingdom.
The report notes that the ‘major’ family businesses are at a critical juncture, with most undergoing a generational transition. There are over 23,000 registered family businesses currently.
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The center is moving towards a system of voluntary subscriptions and is collaborating with ‘Thiqah’ company to provide services and advocate for funding needs to the relevant authorities. This is aimed at empowering the center to enhance the sustainability of family businesses and enable their developmental role.
Long-Term Investments
The report emphasizes the sector’s importance due to its competitive nature across various industries. Family companies inherit values that have helped them endure and expand. They are characterized by unique features that make them successful tools for economic development, focusing on long-term investments compared to non-family entities. They exhibit resilience in crises, adaptability to changes, and a strong community connection, providing secure and sustainable employment opportunities and bolstering their charitable contributions, notably supporting charities and the third sector.
Key Challenges
The report highlights financial support provided through an agreement with the Federation of Chambers of Commerce, amounting to one million riyals annually, and the partnership with ‘Gross’ charitable foundation, contributing 850,000 riyals to an alternative dispute resolution program. These collaborations enable the center to advance in achieving its goals and developing its services. However, the family businesses in the Kingdom face various challenges that require attention and resolution through awareness, knowledge dissemination, and the launch of initiatives based on global best practices in management and sustainability, in cooperation with public, private, and non-profit sectors.
The center has launched new programs such as the National Center’s platform for Family Businesses, digital transformation initiatives, and the development and launch of diverse services and programs to serve the family business ecosystem, including family business members, government entities, experts, consultants, and the general public.
Expanding Partnerships
The report indicates that the center has formed 10 new partnerships and agreements, bringing the total to 13. This is the result of efforts by governmental bodies, private sector entities, and the third sector, including presenting views of family businesses and supporting government objectives related to the family business sector. The center has also granted four research scholarships to explore and study the state of family businesses in the Kingdom, in cooperation with the National Center for Social Research and Studies.
Highlighting the significant numbers, the report states a 198% annual growth in the revenue of family businesses, with 95% of businesses in the Kingdom being family-owned, 57% of private sector employees working in family businesses, and 48% of the Kingdom’s total workforce is employed by family businesses. There are a total of 23,000 family businesses registered.
