What Ails Family Businesses

Family businesses and SMEs contribute greatly to the economy of any country including Kenya. They must hence grow, thrive, and exist beyond their founders. I have found that once a founder of a family business dies, more often than not, the children are left fighting. They take each other to court and the process goes on and on for years. Some dependants have even lost their lives due to lack of finances because accounts have been closed as the matters are in Court. For those who don’t go to Court, they squander the monies very fast and bring the business down almost immediately.

However, I have also observed we have very successful family businesses in Kenya, the likes of Mabati Rolling Mills of the Chandaria family. The question is, therefore; what is it that family businesses are doing or not doing to be in the situation they are in? There are a number of reasons contributing to the situation facing family businesses today. From research, one of the major reasons that determine the continuity of family business is succession planning.

Family businesses that take succession planning seriously are likely to live beyond their founders. Those that do not are likely to die with the founder. My book titled Growing A Business Empire: How To Effectively Manage Leadership Succession For Organizational Growth, with a foreword by Dr. Manu Chandaria gives details on how best to manage succession planning among many other important topics that if understood and applied well would help any business to grow and thrive over the long haul.

It is important to understand that succession planning is not just a function for family businesses. Every leader should carry out their succession planning within their own outfits because one day they will exit. The question every leader should ask themselves is whether once they exit, the organization will continue uninterrupted or with minimal interruption, or a huge void will be created. A good leader who plans well for their exit mentors and coaches others to take their position once they are gone. Most leaders understand the necessity for succession planning yet they don’t seem to plan for it.

Why is this? Most of the leaders seem to suffer from the founders’ syndrome. The passion and charisma of the founder are important for organizational growth but after some time, can be destructive and can limit the same growth. An organization must be able to grow beyond its founder. Founders have a lot of influence and shape the culture of the organization. Many organizations seem to suffer from the founder’s syndrome and this stifles the growth of any organization and delays succession planning.

Please watch this video to learn How to overcome the Founders Syndrome

How do you know an organization that is suffering from the founder’s syndrome? It is strongly identified with the person or personality of the founder; The founder makes all the decisions without input from others; Decisions are made in a crisis mode and forward planning does not exist; Meetings are held to rally the troops, get status reports, and never for strategic reasons; Little or no strategic planning and agreement of objectives; Key staffs are selected by the founder and are mostly friends. Personal loyalty is considered in selection rather than skills, competence, or experience, and the role of the staff is to support the founder. This goes on to a situation where board members are underqualified and easily intimidated by the founder, and when the founder is challenged on any issue they respond by either ignoring or ridiculing the people. People stop working towards the vision and mission of the organization and instead operate around the personality of the founder.

A successful founder must plan their succession early if the organization has to grow and live beyond them. They must be willing to let go at the right time and to the right person. They must also be willing to identify, coach, and mentor their successors early. Succession will not fall into place, it must be planned if you the founder wants to leave a legacy and ensure continuity of your business once you exit. And as they say, failure to plan is planning to fail.

For more on Family Businesses buy a copy of GROWING A BUSINESS EMPIRE at  MY SHOP or at marymugo.shopyangu.com.

Dr. Mary Mugo

Strategy, Governance and Management Consultant

Website: www.marymugo.com