Family issues defining Botswana’s retail revolution

27 Aug 2018

When Gaborone tricenarians and quadragenarians talk about the good old days the subject will invariably turn to hanging outside Kings Restaurants, Fat Albert’s, uncle Boyce’s or feasting on the delicious pop Inn fish and chips.

In one generation, all these family businesses which gave Gaborone its character have been run out of town by Choppies, Spar, KFC and Nandos.

The biggest victim of Botswana’s retail revolution is without a doubt family owned businesses. That general dealer at the centre of the village owned by Mma so-and-so which used to extend credit to neighbours has been replaced by an impersonal chain store.

Except for Pop Inn in Gaborone, most family owned retail stores were sunk by the country’s retail revolution. While some buckled under the weight of old habits, most simply failed to make the transition from one generation to the next.

Passing the baton (the family business) is often not an easy thing to do. Heirs are frequently   viewed as less generous, less transparent and less entrepreneurial, as well as less likely to be a good force in business or society. Often they have had quite a different life experience, if the family business has been a successful venture, then they probably haven't had to struggle and scrape as much as the entrepreneur had to and the next generation may not have the same commitment and drive.

Dr Sethunya Mosime, senior Sociology lecturer at the University Of Botswana says succession planning in Botswana is a problem. “Generally, we in Botswana fail at succession planning; this is evident even in the preparation of wills, usually to dispose of family property. Often times when you come across an old store that s vacant it is accompanied by “there is a legal battle over that store” this is because most business owners don’t do effective succession planning. People usually think automatic succession into a business is easy, in theory it might be but in actual practice it is rather difficult, business owners are barely ever psychologically, emotionally and even financially ready for the succession.

Many business owners would like to pass their business to the next generation. They would also like to make sure they have adequate funds to enjoy their retirement years, this may partly be the reason why parents end up selling the family business to a third party instead of passing it on to the next generation.

One of the most agonizing experiences that any business faces is the transition from one generation of top management to the next. The problem is often most sensitive in family businesses, where the original entrepreneur hangs on as he watches others try to help manage or take over his business, while at the same time, his heirs feel overshadowed and frustrated.

Heirs of first generation entrepreneurs often patiently and impatiently wait in the wings for their time to take over the running of the company but when the time comes, they fail to perform. Family businesses often face pressure to hire relatives or close friends who may lack the talent or skill to make a useful contribution to the business. Once hired, such people can be difficult to fire, even if they cost the company money or reduce the motivation of other employees by exhibiting a poor attitude. Phenyo Badumedi who works in maintenance at Botswana Telecommunications says a lot of family businesses fail because of family conflicts. “Familyfeuds exist in every family. Sibling rivalry, for instance, is all too common. Children think their time has come despite their parents who think otherwise. It is inevitable for egos to take control, especially when there is an equal distribution of power in the business. Poor business decisions are made, leading to poor results hence business going down.”

Determining who should take over leadership and/or ownership of the company when the current generation retires or dies has always been a difficult issue for family owned businesses.

Less than one-third of family-owned businesses survive the transition from the first generation of ownership to the second. Problems affecting the transition might either be because the company was no longer viable; the next generation does not wish to continue or it might be because the new leadership was not prepared for the burden of full operational control. Lack of planning, however, is by far the most common underlying reason for a company to fail in the generational transition. Often times, business owners may be reluctant to face the issue because they do not want to relinquish control, feel their successor is not ready or wish to maintain the sense of identity they have for so long gotten from their work.

Mpho Molemogi a teacher at Naledi Senior Secondary School in Gaborone says complex issues and emotions often affect family businesses. “Despite the phrase, “it’s just business,” it’s never “just” business in a family business. To the contrary, everything is personal. “Why should Mpho get as much money as I do when I’m the one who personally guaranteed the line of credit”?

Unlike in other non-family business settings, in a family business, when owners are divided over a business issue, the issue becomes personal. This is especially true when families grow to include new members such as in-laws.