Key tips to managing a family business

0
157

Staff Reporter

Windhoek-Some of the world’s leading businesses were started by families through investing savings and dedicating time to building an entrepreneurial venture. Namibia also has a number of successfully family-owned businesses, which have been going strong for many years.

Head of Commercial Banking at FNB Business Fanie Steenkamp gives some insight into the basics of building an accomplished family business.

“The success of a family-owned business largely depends on the commitment of the family members involved in the business. Family enterprises predominantly demand an all or nothing approach, as the entire family’s livelihood often depends on the success of the business. Unfortunately this also the main cause of family businesses that fail.”

“Unlike decades ago, approaches to family-owned businesses vary with every enterprise. The focus has been shifting towards holding ownership, instead of having family members operationally involved in the business – essentially transferring management to a professional manager. Family involvement would then be at board level or top management, where the focal point is broader business strategy,” he adds.

Fanie says even though families vastly differ in their ways of approaching a family-owned enterprise, there are still those who remain hands-on, especially when the business is still relatively new or small. “Whether a family is actively involved or not, it is important to set a blueprint of how the business will operate.”

He recommends the following ways to avoid challenges that could destroy a family business:

Be clear on ownership
Ownership within family businesses could become a major issue if it is not made explicitly clear (and in writing) who owns what. In cases where this is not clear, the business could suffer as everyone will feel that they have equal rights to the business’ assets.

Decision-making powers
It is important to have one or two people (at most) to take charge of all business affairs and make important decisions. The decision-maker/s could always consult when there are far-reaching decisions to be taken, such as expanding or downsizing.

Clarify roles through job descriptions
If family members are actively involved in running day-to-day activities of the business, it is necessary to clarify roles and have job descriptions, so that everyone is clear about what they need to be doing. As the business progresses through its life cycle, minimum standards to fulfill critical roles become even more important.

Avoid interference
Family members are bound to have an opinion on how the business should operate. In a case where the person running the business is not part of the family, it is important to channel opinions, or suggestions in a manner that does not seek to interfere or undermine the decisions of the management team.

Plan succession
Succession is one of the biggest challenges often faced by family businesses. It is essential that the family has a plan in place to ensure seamless transition and change of leadership when such time comes. This plan should be well communicated throughout the whole family.

LEAVE A REPLY

Please enter your comment!
Please enter your name here