Family businesses in Mexico resist the onslaught of the pandemic, says study

Mexico City, 17 Mar Mexican family businesses resisted the onslaught of the pandemic, with nearly three out of four seeing sales growth in 2021, a study by the BBVA Research Center for Business Families (CIFEM) and Ipade Business School revealed on Thursday. “Despite recent adverse circumstances, 72% of family businesses report progress and growth in their sales and 66% show an increase in their assets over the past three years. While 40% of business families perceive an improvement in their unity and harmony,” the report said. The study “Level of Progress of Family Businesses to Achieve Continuity and Harmony 2021” was conducted to determine the current status of these companies with a statistical sample of 835 members of family businesses between February 4 and December 15, 2021. Despite increases in sales, the research found that only 5% of organizations of this type have an adequate level of progress, down from 7% in the 2020 study. However, half of these units, 51%, “have issues to be resolved and 44% are at serious risk of not surviving due to the accumulation of bad practices,” the research warned. In two out of three family businesses, 66%, institutionalization, professionalization and development of good governance “is non-existent”, a higher proportion compared to 60% in 2020). Meanwhile, 29% have areas of opportunity and only 5% “have it clear and working”. The study is published after Mexico's economy grew 4.8% in 2021, below expectations from the Government, which expected growth of 6% following the historical contraction of 8.2% in gross domestic product (GDP) in 2020. Due to the covid-19 crisis, an estimated 1.6 million Mexican businesses closed definitively between October 2020 and July 2021, according to the National Institute of Statistics and Geography (Inegi). Even so, in that same period, 1.2 million establishments emerged, according to Inegi. The BBVA and Ipade study found that almost one in four family businesses in Mexico survives the first generation of founders, above the world average. “An interesting finding is that in 2021 there are more family businesses in a second generation, compared to global statistics: 24% of companies are in the second generation against 22% according to world standards,” said Ricardo Aparicio, director of CIFEM-BBVA at Ipade. The executive warned that “this situation changes in the third generation and later, where there is 7% (of companies that survive) against 11% of the world standard.” CHIEF ppc/mqb