Over a third of owners of family businesses would gladly sell a stake in their company for long-term financial success, according to a new survey.
A survey by Deloitte East Africa also found that although nearly half of family business owners were keen to maintain control to ensure the legacy and preserve the family tree, only 26 per cent had a concrete plan for the chief executive position.
Even fewer, found the survey, have a stated plan for other C-suite positions.
“Family businesses tend to lean towards a long-term view rooted in shared values, vision and culture, which can help them maintain family control over the years. However, family ownership, by itself, does not guarantee a business’ longevity,” said Deloitte East Africa CEO Joe Eshun.
He said family businesses need to translate their vision for the future into a solid action plan if they are to remain competitive.
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About 70 to 80 per cent of businesses in Kenya and around the world are family-owned. They are defined as having at least one representative of the family or kin formerly involved in the governance of the firm.
If publicly listed, the persons who established or acquired the firm from their families or descendants enjoy at least 25 per cent or more of the decision-making rights mandated by their share capital.
They range from the numerous micro, small and medium-sized enterprises to multinationals listed at the Nairobi Securities Exchange (NSE).
The Deloitte report also found that whereas maintaining ownership, ensuring the legacy and preserving family were cited as main challenges for every family business, many of them had not created a formal succession plan.
Moreover, less than one-third of respondents believe their families share a common vision for the business’ future development. Also, a third of respondents would be willing to trade at least some measure of family control over the business for greater long-term financial success.
A total of 791 executives from 58 countries were interviewed in yet another survey on family businesses in Africa, about the challenges and opportunities they are currently facing.
In Kenya, family businesses contribute about 60 per cent of employment. Other studies have shown that most family businesses are averse to seeking outside help, for example, public listing.
“This apprehension may stem from their concern about whether the family’s vision for the business will be truly understood and honoured,” said a Family Business Survey for 2017.
Failure to enlist outside help has resulted death for most family businesses.