A lot of family businesses in Nigeria have died due to the demise of the founder. For some that are still alive and struggling, they are enmeshed in controversies as the children continue to fight over their share of the investments while the business nosedives.
To the Managing Director of Fidelity Bank Plc, Mr. Nnamdi Okonkwo, the principles every enterprise requires to survive and outlive their founders are the same. He stressed the need for entrepreneurs to adhere to corporate governance principles, proper book-keeping among other best practices for their businesses to survive.
Also, the founder of LEAP Africa, Ndidi Nwuneli, urged operators of micro, small and medium scale enterprises (MSMEs) in Nigeria to always put in place the right structures for their business to outlive them. Nwuneli, also stressed the importance of governance for any organisation to survive. According to her, every forward-looking firm must have a strong board of directors.
On his part, the Managing Director, UPS Nigeria, Mr. Ralph Ozoude said: “Part of the challenges companies have is sustained growth and some of it has to do with corporate governance and compliance.
Joachim Schwass of IMD, a Swiss business school, argued that the most common characteristic of failed successions is that the family marks out the eldest son for the top job from an early age, and hands it to him regardless of ability.
“To avoid this fate, and increase the chances of producing a strong successor, business families need to grasp two things. The first is that inheritance is a process, not an event. That process involves giving potential heirs a chance to prove their worth. The second thing that business founders must grasp is that behind a successful family firm lies a successful family,” the KPMG report added.
The foregoing clearly shows that by keeping family stories and history alive, younger generations are able to understand and appreciate their parent’s and grandparent’s efforts as well as the work needed to build and maintain family wealth. Combining awareness of one’s past with thoughtful strategy for the future can help families overcome the Three Generation Cycle.
Importantly, most of the preparation and training for the next generation will have to start earlier rather than later, to ensure a seamless transition in later years. Also, financial literacy amongst members of the family business cannot be over-emphasised as it is the key to making sound business decisions. Taking the company public by listing it on the stock exchange is also crucial for its survival in the long run.
Source: Chima, Obinna., February 28, 2018, https://www.thisdaylive.com/index.php/2018/02/28/avoiding-traps-that-kill-family-businesses/