Family businesses’ inability to transcend first generation linked to succession planning

Experts have traced the inability of family businesses in Nigeria to transcend the first generation to the issue of succession planning. They say the need to focus on entrepreneurial succession problems is due to the fact that many promising family businesses in the country have collapsed over the years, soon after the demise of their founders.

Although, a legal description of succession is given as the passing of property to persons upon the death of the owner of the property, in the business world however, it is not compulsory that the owner must die before the issue of succession arises in the management of an enterprise. The owner-manager may choose to retire after a hectic working life (the case of Michael Otedola of the Zenon Group).

Evidence shows most Nigerian businessmen and entrepreneurs hardly voluntarily retire, usually dying in ‘active service’ or are forced to retire by a health challenge. This characteristic of Nigerian entrepreneurs further compounds succession issues.

According to experts, most entrepreneurs never give a thought to the need to prepare an acceptable successor in the event of their exit, stating that the cultural values and beliefs of the society do not help matters as planning for inevitable occurrences, such as death is not positively viewed. It is believed that the first male child in many African cultures is automatically assumed to be the ‘heir apparent,’ giving no reason for deliberate well-thought out succession plan.

‘‘One key issue as seen in Nigeria and in many other developing countries in Africa is the issue of succession planning; a lot of people are not attuned to that. Once a business is doing well, you need to begin to look at the business after you; but most people do not do so,’’ Olatunde Akande, a consultant in the area of small businesses, says in an interview with BusinessDay.

According to him, that is the only way you can have businesses that would last for generations. ‘‘To do that effectively, you must be able to delegate, get the right people and put structures in place that would enable the business run successfully even when you’re not there,’’ he says.

Angela Ihunweze, business plan expert/CEO, Angela Itambo Company, in an interview with BusinessDay, says, ‘‘Succession planning is very poor in Nigeria. The first thing is the vision of the entrepreneur, which has to be long term, but most of them plan short term, including not putting structures in place that ensure sustainability of the business.’’

Ihunweze also says there is a conventional angle to the issue, which could be linked to the Africa mores, where owners believe the business should promote the family, and not the other way round. ‘‘In developed countries, employees are motivated to put in their best into the business, with hopes of taking on the management of the business after the owner’s tenure,’’ she says further, adding that this is not exactly so in Africa, where owners are found to bring in their wards at management level to run the venture, even without their understanding of the business.

NONSO NDUMANYA