BY VICTOR ADAR
In the current environment, family businesses, if not well managed are bound to coil, fail and die.
Speaking at an online conference dubbed Supporting family businesses to navigate these challenging times, Amit Patel, the CEO of Ramco Group said that besides sustainable, reliable and good structures, it is time private sector players engaged services of experienced experts.
Actually, it is important to plan, structure and protect both the business and personal assets. Having the right advisors to ensure that everything is safeguarded and that the business will remain stable for generations is also a plus.
“For us a legacy is so important that we are seventy years old but want to continue… so we need someone who will not do what’s right for me, or for my father, but what’s right for the structure of the business, a legacy expert who works right. It also helps in avoiding conflict in terms of who is right for this job.”
To Mr Patel, agribusiness, affordable housing and warehousing offer the best investment opportunities. With the ever growing e-commerce numbers, for example, it is smart to invest in industrial warehousing.
“Take advise and put in place frameworks that would stand the test of time. What are the business goals, what education gets paid for within the family? So good advice is key,” says the 3rd generation Kenyan Asian.
Major causes of conflicts in family businesses include deal structuring, allocation of securities and fundraising, poor succession planning especially when there is death, or divorce, and lack of trust.
“Conflicts start when there is a failure. It is because families do not pre-empt conflicts. You plan for the best and hope for the best… expect conflicts and deal with them head on,” says Amaechi Nsofor, partner, Grant Thornton.
Never underestimate the power of family owned businesses. How resilient is your business in terms of market risks? How will you change your business focus during challenging times? The impact of Covid-19 on family owned businesses is a good example. As things slowly begin to recover, growth momentum will only set in when the right buttons are pressed.
Sprigg Jonathan of Stanchart Bank, Jersey, says that professionalization of family businesses is what will successfully spur growth. And it is about putting in place effective structures. If family owned companies are able to streamline key structures earlier then the pain of losing hard earned capital will be dealt with once and for all.
While business progress cannot be made automatic, it is a no brainer that practical direction will yield much. Running a family owned business is not a joke. This is a journey that requires passion.
Rajni Vohra is a medical devices manufacturer. Memories of how he started off as a sweets seller are still fresh on his mind. Theirs is a story of three brothers armed with Sh70, 000 coming together to start a business 41 years ago. Today, Dr Vohra says, Vora Group of Companies, which includes Revital healthcare (EPZ) limited and Revital Pharma Limited, are exporting to 14 countries in Africa. This shows that there are opportunities. Finding the right sector is what matters.
The company is also angling for manufacturing of masks. It is only when family owned businesses brought professionals on board and plan for the future will the impact be felt. It is quite difficult to thrive if you can’t see the trends, he says.
“Change with the time. If you don’t change with the time you will be left out. I have seen many business fail. Every ten years there is business competition running behind you. So, mark the growth of the business by changing with the times otherwise you will be left behind, and do expansion as much as possible,” says Vohra.