Running a family business is not different from the way other businesses are run. Operational principles are the same.
Any business that is owned by at least two or more members of a family is a family business. Managing businesses of this nature is never an easy task. Petty sentiments tend to undermine stability and growth. If you are a youth involved in running your family business, there are many things you have to learn.
You’d profit immensely from studying other successful family businesses; they’d provide you good models on which you can build your own. Some famous Nigerian family businesses are, Dantata Group, Raccah Group in Kano, Alabukun, founded by the late Jacob Odulate, Domino Stores by the Murray-Bruce family, Ibru Group, etc. There are scores of others located across Nigeria. If you conduct a research on these businesses, you’d see how they started and that could inspire you.
Every business model must submit to global standard practices of running a business, if it is to succeed and endure. Unfortunately, many family businesses tend to die prematurely owing to several factors, chief among which is poor management practices or, to be more specific, lack of accountability. Most people think that because they own a substantial stake in a business, they could deep hands into the company’s purse at will and spend as they wish. This is the bane of most privately-owned businesses.
Therefore, if you are involved in a family business, you’d do well to avoid this bad practice. Running a family business is not different from the way other businesses are run. Operational principles are the same. If run foul of the law of accountability, your business would suffer. You have to put all the structures in place – a board, management team, all the relevant departments, depending on the size of the business.
Any genuine business should be registered with the Corporate Affairs Commission, CAC. It is also very important that a family business meets its statutory obligations to government agencies, its shareholders, customers, workers, etc. If you are in the driving seat of your family business; make sure that you have an obligation to run the company profitably because, at the end of the day, that’s the bottom line. Block all leakages and always bear in mind that a commercial venture is not a charity. You’ve got to make profit or close shop.
Never compromise on standards and ethics. Avoid corrupt practices, illegalities, exploitation of customers and workers. You must be transparent to earn the respect of your publics. Sound business practices, high integrity and competitiveness are what contribute to a healthy Return-on-Investment, ROI.
Stakeholders in most family businesses sometimes try to play on emotions, by indulging in practices that tend to undermine laid-down company policies. This happens in the areas of recruitment of unqualified relatives to sensitive positions of leadership, just because they are family members. A patriarch of a family business makes his favourite son the Managing Director in the name of succession. Well, if a scion has the qualification to be the CEO, he can justifiably get the post if there‘re no more qualified persons in the family. However, let the most important position go to the best qualified, even if they are the last born of the family. That’s how you put your outfit on a firm foundation. Run on merit, period. There’s little place for sentiments in business.
If you must give jobs to family members, make sure there’re real vacancies for such people, otherwise you’d have a bloated workforce, or a top-heavy management. Neither is good for your balance sheet. It is better to appoint family members as non-executive directors and let them get their share of the profit at the end of the financial year. That’s plain business wisdom.
Don’t allow sibling rivalry to get in the way of the smooth-running of the business. You can put all those kinds of attitudes in check by getting all the stakeholders to sign a Memorandum of Understanding, MOU and a company Rule of Ethics, ROE, that guide the operations of the company. Salaries and allowances of directors should be comparable to what obtains in the industry. You can’t afford to overpay yourselves because your family owns the business.
Every business rises and falls on the compliance of stakeholders (owners/managers) to standard business practices and ethics. If you fail to do business the right way, the business will fail abysmally. Most family businesses tend not to survive their founders because the patriarchs hardly make good succession plans. Therefore, plan for the inevitable. Who will be in charge when the founder dies? You should answer that question while you are alive. PUNCH Nigeria Limited, the Lagos-based newspaper group is a good model of family business worth studying. Another publishing group I recommend is the Nigerian Tribune, owned by the Awolowo family.
Family businesses should go public if they hope to become entrenched in the business environment. A publicly-quoted company is more attractive to corporate investors, and such a concern has the chance of transforming into a transnational entity like the Guinness stout, founded by Irish businessman, Arthur Guinness in 1776. Several European conglomerates started as family businesses, and because they are so well managed, the vision survived their original founders.
If you want your family business to live long after your departure, study successful family businesses and take the lessons to heart. They would serve you well.
“You can start with nothing and out of nothing; and out of no way, a way will be made.” – Michael Bernard Beckwith
Ok folks, let’s do it again. Stay motivated.
Ladi Ayodeji is an author, rights activist, Pastor and Life Coach. He can be reached on 09059243004 (sms & WhatsApp only)