By Tyneketra Wanja
The first part of the proverbial statement in the Bible from Proverbs 13:22 states: ‘A good man leaves an inheritance to his children’s children.’ Whereas the verse does not solely speak to finances, it is also part of the inheritance. Today, the term Generational Wealth is quite popular with most of us, if not all, keen to create wealth in assets and financial resources that can be transferred through our generations. Our motivation starts from a survival mode to meet our basic needs, to educate ourselves and our children and this slowly elevates to affording a few luxuries to establishing a legacy. At times, it is the passion to change the wrong aspects of life or fill an existing gap. Owning an enterprise that can advance to a Family-Owned Business opens an opportunity to actualize this dream.
There is no small dream when it comes to starting a family owned enterprise. It could be selling vegetables in a kiosk that will turn to the biggest food market in the country or globe. We have seen success with businesses that started small such as Wal-Mart, Ford, Samsung Electronics, the BMW Group and locally the Chandaria Industries, Naivas Supermarket, Bidco Africa, Chandarana Foodplus and Royal Media services just to mention a few. Each has a different story, some started quite small than we can imagine, a dream executed by its founders and scaled up over the years to grow to where they are today.
The establishment of family-owned businesses considers various aspects. Firstly, have a vision, mission, and purpose statement aligned with the passion for the enterprise that you are building. Knowledge of where you would like to be in a couple of years will help in putting up the right strategies for the next years of operation. Some of the strategies include the leadership structure, market strategy, governance structures, legal compliance, and operational systems. Counting the cost to achieve the dream is important to grow the business. As the business grows there will be a need to engage professionals to further the agenda of the business.
Secondly, analyze the strength, weaknesses, opportunities and threat that present itself in the course of business. Some of the opportunities include expansion and diversification of the business or the use of technology to advertise and advance. In addition, a Family Business does not thrive without the Family. One needs to be intentional in the running of the family to enable a good environment to run the business. Have regular gatherings, mediation exercises, outing activities, vacations, virtual meetings that bond you together. Inculcate the business culture slowly as the children grow up along with key values such as integrity, resilience, honesty, teamwork, respect, leadership, trust and creativity. Let it be part of your social-cultural set up to build the children’s capacity as future successors.
The wise saying ‘failing to plan is planning to fail’ is quite true for family owned businesses. As a founder or part of the inherited enterprise, you need to plan for the future. Succession planning through clear documentation features strongly in planning for the future. It is a process that needs to be done at the start of the business to ensure continuity of the business over generations to come. Once a succession plan is put in place, one can invest in mentorship and shadowing of the successors and also allows for phased succession. Proactivity is key in succession planning being honest to oneself over potential successors. Additionally, you reduce the inevitable conflict caused by the different personalities, priorities and perceptions of family members and employees. Lay out alternative dispute resolution mechanisms like mediation and negotiation to resort to in the event of a conflict.
One of the Chinese proverbs states that wealth does not pass the third generation. The first generation labored so hard to create wealth, the second generation, seeing their parents’ hard work were inspired to preserve and grow the wealth whereas the third generation not having seen any of this squander the wealth. This has definitely been experienced with different family businesses across the globe over the years. Passing only the assets and finances to our future generations may not be the best way to leave an inheritance. We need to prepare them to carry our vision and even improve on it through conveying the knowledge and wisdom of managing and growing wealth.
Family-owned businesses are a cornerstone of the global economy, contributing nearly 50% of the world’s GDP and employing up to 60% of the workforce. These businesses generate significant economic value and provide a unique platform for creating lasting, generational wealth that can transcend individual lifetimes providing stability and opportunity for future generations. Furthermore, these enterprises often play a crucial role in local and national economies by offering employment opportunities, supporting communities, and combating issues like poverty and inequality. In many ways, family-owned businesses become a vehicle for social mobility, allowing individuals to thrive and contribute to their societies. As such, investing time and resources into these businesses doesn’t just mean creating wealth; it also means making a meaningful difference in the lives of others. Embrace the journey of entrepreneurship within the family business sector, and you not only shape your own destiny but also empower countless others to do the same carrying forward the legacy of hard work, innovation, and social responsibility.
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