Despite economic turmoils, Kenya’s family business sector continues to be vibrant, successful and ambitious. Successful family businesses are a win/win but at most 10% survive to the third generation and less than 10% of owners retire financially stable. Multi-million family businesses in Kenya the likes of BIDCO, ICEA Lion, KENAFIC Industries, PWC just to mention but a few are perfect examples of successful businesses that have survived time and secured spot in the market. Yet quite a number of other multi billion family businesses, succumb to failure at their prime stages of growth.
“Family businesses in Kenya need to be able to think beyond the immediate demands of the day-to-day business and develop an informed view of the future .This means understanding the trends driving change, assessing what products are vulnerable to new technology and how global trends are affecting their markets,” a report said.
Among the major challenges, family businesses face is family feuds. Deep-seated, long-lasting bitter fights and quarrels can affect every single person within the firm drawing divisive line. Long family histories, family relationships and succession plans just add insult to the injury. This calls for strong leadership full of wisdom and experience. With a good leader, overall stability within the organization and longevity is guaranteed.
Lack of succession plans has cost most family businesses because some leaders want to be in power forever and too much trust a family has put in that person. Yet for those very reasons, close relationships and long histories, family businesses should have a strong succession plan is in place. Most successful family businesses have exhibited the “sticky baton” syndrome where the older generation hands over management of the business in theory, but in practice retains complete control over everything that really matters.
“Succession planning is vital to ensure business continuity but it has a wider impact, too. Succession planning is essential to ensure the aims of the owners and the family and the objectives of the firm are properly aligned over the medium to long-term,” a report stated.
Governance issues such as internal hierarchies, rules and management of other businesses, because of the level of trust inherent at family firms, should be strictly adhered to. Such long-term commitment leads to additional benefits, like a better understanding of the industry, organization and job, stronger customer relationships and more effective sales and marketing.
“If you’re a family member working in a professionally-managed family business, other professionals will look at you differently. Once you step into the office, your number one interest has to be the business, not family,” advised Hanish Chandaria- Managing director at Kenpoly.