Family Business: Who’s to Take Over?

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By Petronella Sibeene WINDHOEK Close to a hundred individuals from the business fraternity gathered in the capital last Friday for a ‘Succession planning in family owned business in Namibia’ conference. Expert on entrepreneurship and family-owned businesses Gideon Maas told New Era that research has proved that 90 per cent of family-run businesses worldwide never make it to the second generation when the sole owner passes on, due to lack of proper succession planning. “We have learnt that entrepreneurship and family business are a cornerstone for a social and stable economy. We need to create awareness in southern Africa to ensure that businesses do not die with the owner,” Maas stated in an interview. Most family businesses, Maas added, lack a governance system and this contributes largely to the failure of a business. He said that during the infancy stages of a family enterprise the owners are dedicated to turning a dream into a succession reality but with success, the owner becomes more committed to the management and operational activities often failing to recognize the need to plan for succession. “Family businesses can perform well but when it comes to issues of handing over, many face difficulties and thus there is a need to train people on how to choose a successor.” Though succession is a strenuous process, Maas advises those in family businesses to come up with a succession plan to avoid family break-ups. A yearly family business retreat is recommended to bring the family together and reflect on business affairs. The conference also looked at key person insurance adding that it is vital to compensate the business for the loss it is likely to suffer when the owner of the business dies. Losing a key person is likely to slow down the turnover, causing a decline in profitability, difficulty in raising finance, delay in finding a successor and the high cost attached to finding one. Meanwhile, the expert on entrepreneurship Maas said there was a great need for small and medium entrepreneur-ships in every society. Entrepreneurship is an essential part of the business world needed in every nation for sustainable development, he said. Entrepreneurs have important roles, ranging from creating jobs for the community to providing goods and services that are needed by everyone and developing a country economically. According to Maas, most businesses in southern Africa have failed because the owners want to operate in isolation. Though self-reliance and the capacity to inspire are some of the many core attributes of an entrepreneur, Maas says it is important to spot trends globally and also develop one’s own power by empowering others.