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Michael Tome
Business Reporter
It is undeniable that the bigger chunk of the world’s wealth is created by family-owned businesses. Worldwide, it has been established that household businesses outperform non-family businesses.
Findings are that businesses that are majority owned by a single family contribute 70-90 percent of the world’s GDP, a clear testimony of family business success.
Unfortunately, the observation is not the same when it comes to African enterprises. It is on record that only 2 percent of family businesses on the continent last beyond the first generation.
According to newspaper columnist, Ms Tsitsi Mutendi, who has done extensive research on family business matters, one in every three or even two out of three Zimbabwean businesses are family owned.
“They might be structured in ways where they look like corporates but most of them are family-owned businesses,” says Ms Mutendi.
But what really has earned Africa this position where it fails to successfully hand over business to the next generation.
Experts in this area have cited various reasons leading to business failures in Africa.
All by myself
Blame has, however, been placed on the brainchild of the business, who tends to do everything in the business without involving immediate family members.
Everything that runs in the business is based on the founder, they tend not to allow the families to be involved in the business and that is the reason why when they pass on they go with their ideas leaving families guessing on how to operate.
Said Ms Mutendi: “A lot of family businesses fail to transition from the founder to the next generation where the founder is like the “James Bond” leaders who do everything without family involvement.
“Thriving family businesses have been commended for early introduction of family members into the business for better acquaintance when the inventor of the business leaves.”
Succession plan
A succession plan can greatly help in ensuring business continuity. In many instances there is lack of succession plan, that is involvement of the family on a professional basis.
Many renowned companies have been credited for initiating their children into business at a young age, closer to home Irvine’s poultry business has seen generations taking charge from 1957 and today is one of the most successful companies in the country.
Estate and commercial farm owners were known for introducing their children to the heart of farm operations, such that by the time the father grew older they would have know-how of the business.
In fact, they would have acquainted themselves with key processes of running the business hence continuity was guaranteed. The parents put in place structures to ensure that they have a vision for their business and clear family financial goals.
Nepotism
Family and business are two separate entities.
While it is a welcome gesture to help family members through employment, it is precisely for that same reason that many African businesses find themelves on their knees.
On several occasions business owners have a soft spot for relatives, they hardly consider if they are competent enough to perform the duties at hand.
Professionalism and competence are at the heart of sound business operations hence they need to be unceasingly upheld to ensure continuity and success.
But in the African set-up, that philanthropic gesture seems to overpower the professional approach leading to the demise of enterprises.
According to Ms Mutendi: “In business you should know there are processes and procedures that are followed to make a business work … family thinks they are doing well by hiring relatives.
“Sometimes you give a relative a job and they do not perform, you cannot really come out to point their wrong doings because they are treated as family.”
Solid family relationship
Stronger family relations seem to be the key ingredient when it comes to the sustenance of a family business.
When the family structure coughs the business sneezes, family business certainly takes form of family relations.
Many can relate that divorces have resulted in ownership wrangles. They (divorces) have gone down with a significant number of businesses as each part walks away with a significant part of family business portion.
Therefore, many businesses have been set up as a tool by family itself to ensure that they have financial stability. Such businesses have succeeded in building entities that have lasted from one generation to the other since the family would have defined and shared the vision of the business to the family.
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