*This article is brought to you by Sanlam Business Market
By Jannie Roussouw*
Running a business with partners is challenging. Even more challenging is when those partners are your family members.
The family environment is an emotional one, with the emphasis on relationships, trust and loyalty. Balancing family expectations with business needs can prove challenging especially if you don’t have a shared vision on your future, says Jannie Rossouw, Head: Sanlam Business Market, adding that research indicates only about 30% of family businesses survive into the second generation.
Rossouw says communicating your vision for the business as a family and making sure that the next generation is happy to take over is a necessity in order for the business to thrive beyond the first generation. He lists the following elements that contribute to building a successful family business legacy:
- There should be a strategy document
Rossouw says this document should outline the family’s shared business vision and values.
“It should set out how you as a family do business, including the ethical standards everyone is expected to uphold. This is especially important should outsiders – such as your children’s spouses – join the business.”
- Roles need to be clearly established.
If roles are not defined for each family member, there is likely to be duplication of tasks and redundancy.
“You also run the risk of things falling between the cracks because it’s not clear who is supposed to pick up what,” he says.
Read also: 5 ways to bulletproof your business
Often, successful family businesses ensure that each member of the family has their own unique role and knows what responsibilities come with it. Uncertainty or duplication may be a recipe for strife and a business simply doesn’t need internal competition from its owners – there is more than enough competition in the market place.
- There needs to be proper succession planning.
A family business where succession is discussed amongst family members or with children from an early age has a good chance of successful implementation of a plan.
Yet, Rossouw says many family businesses would rather avoid succession planning because it means having conversations about a subject that involves emotions, expectations and it is more likely to cause family rifts, especially if you are selective about who you want to involve in the business.
“Proper succession planning needs to take place because it gives you a voice on what will happen to your business when you cannot run it anymore.
“It is a discussion you need to have. If approached in the right way – meaning that you have a detailed succession plan and a business will in place – succession planning will not only ensure the future of your business, but also that of your family as well.”
A good succession plan can take the business to a new height and, ideally, those who succeed their parents or family members in business will want to take the business to even greater heights.
“The key is to build a sustainable business and to grow your successors into being able to take over from you should this be necessary. You will not always be here, but you may want the business to continue for decades to come.”
- Jannie Rossouw is the Head of Sanlam Business Market. You can email him [email protected].
