Seasoned entrepreneurs and management consultants have expressed worry over the high rate of collapse of family businesses in their first generation and therefore proffered a number of factors to reverse the trend to keep the businesses sustainable.
Study by scholars has shown that only 30 per cent of family businesses survive beyond their first generation, while 70 percent die early especially after the demise of the founders.
The experts who spoke recently in Lagos at Sophia’s Community Engagement Programme designed to seek solutions to early collapse of family business underlined the entrenchment of sound corporate governance, existence of independent and courageous directors who are knowledgeable about the business and implementation of policies and procedures as panacea to early death of family businesses.
Explaining further on the pillars for sustaining family businesses, Nosike Agokei, chairman of Planet Governance Advisory Limited said some organisations don’t take corporate governance seriously.
He defined Corporate Governance as a system that gives organisations the opportunity to create relationships between different stakeholders of the company , shareholders, directors, employees and the management team and develop policies that will ensure that the company is run properly and it is sustainable.
The greatest risk a company has is the governance risk and this is about the people in the company who are not doing the job they are supposed to do, involve in misconduct, and don’t understand how the business should be run. These are the challenges that lead an organisation to not being sustainable.
How do you deal with the issues he said it is to put in place a sound corporate governance system. The system will explain the structure and management of different stakeholders and ensure that their interests are aligned with the goals of the company.
The governance expert also identified lack of trust by business owners on the senior directors to run the company as another reason for short life span of family businesses.
Sometimes, business owners attempt to train their children to take over the business. But when the children graduate, either they are not interested in the business or lack experience. When they resume office, some of the experienced directors will leave the company. Citing other international family businesses like Tata Group of India and Ford Motors, Anosike hinged their successes on corporate governance.
Also speaking, Biodun Adedipe of B Adedipe Associates listed a number of factors to keep family business sustainable to include, strategic intent, maintenance of core values, identifying differential competences and setting goals to be achieved over defined timelines.
Others include right people to drive the vision and mission of the company, talent development and reward and recognition system. He said owners of businesses should avoid hearing sweet stories about the company and begin to listen to critics.
In his contribution, Moruf Apampa, who is managing director of NSIA Insurance Limited underlined the place of insurance in business sustainability.
He said insurance is critical and it is what you buy when you don’t need it and which is beneficial when you need it. He told stories of how insurance companies assisted firms that lost properties during the EndSARS. With insurance, they were on their feet to continue business, he said.
Sharing his experience, Charles Alaewolu, Chairman of Teco Group underlined disciplined, humility and fear of God in business transactions.
Speaking earlier, the convener, Sophia, Abiri Franklin said the programme is community engagement programme aimed at giving knowledge to those who need it. So fare, she has organised 14 programmes.
She said business Sustainability is one of the areas she researched on while undergoing her PHd programme at Carleton University, Canada and it is a way of giving back to the community to understand certain things about business and sustainability.
