Saturday, October 16, 2021

Most family businesses could improve upon succession planning

Business succession issues are far from being perfectly handled in Botswana and as such they need a serious consideration, the International Institute for Management Development (IMD) Global Family Business Center has said.

According to IMD)Global Family Business Center report, succession will always be an emotive issue, which is all the more reason why it needs to be managed on a professional rather than a personal basis. Too many family firms are still approaching it as a one-off event rather than a long-term process.

A report titled “Botswana journal of African studies 2014” gives one of the earliest accounts on how entrepreneurial spirit was passed across generations. A number of success stories are cited among the white commercial farmers in the Tuli Block.

Success in business was guaranteed due to superior marketing of the produce while the native farmers were restricted to relying on inadequate state resources and could not market outside the borders where there were lucrative markets in Johannesburg, South Africa.

Therefore the statement brings about the concept of familist/kinship ideology (undivided firm under the family head) and individualism (not operating a family business under one head collectively). These terms can be used to qualify what happens when family business degenerates. These two also determine the nature of training that the-would be successors have to undergo.

Another growing trend: an increasing number of family firms ensuring or even insisting that one family member go through a proper development programme before entering the firm, and in many cases this includes working outside the business.

The report also argues that the small nature of businesses owned by local Batswana are such that the children are not attracted to the businesses unlike with case of businesses owned by settlers who have actually managed to pass own business from one generation to another.

However with sound ground rules, things can work out well and everybody can earn a return as the money grows over the years. Thus ‘professionalising’ of the next generation will help to close the credibility gap. It is from small family enterprises that multinational corporations like Toyota, BMW and so on, were born.

Their founders designated their heirs, who went through rigorous trainings and the handover was smooth. But most of people especially Africans fail to carry out the crucial transition and all tricks and secrets of the trade go to the grave with their originators.

Investment experts say that a family business can thrive and pay handsomely over many generations if managed well. Such an enterprise brings the family together and provides a long-term financial security for all involved. The International Journal of Business $ Management recommend that business owners should invest heavily in training courses locally and abroad to sensitize, orientate and change their mindset as well as adequately develop their management skills and abilities. 

RELATED STORIES

Read this week's paper