The Importance of Succession Planning for Family-Owned Businesses
Family businesses are the backbone of economies worldwide, contributing significantly to both economic growth and job creation. However, the complexities of managing and ensuring a smooth transition from one generation to the next can be particularly challenging.
Family-owned schools, like any family business, possess distinct characteristics and dynamics that set them apart from other educational institutions. These establishments often start with a founder’s vision and a commitment to providing quality education. Over time, the school becomes deeply ingrained in the family’s identity, culture, and values.
However, the very qualities that make family-owned schools unique also create challenges when it comes to succession planning. Succession planning in family-owned schools is essential for several reasons: continuity of vision, stability and growth and mitigation of future conflicts.
By addressing the unique dynamics of family businesses and following a strategic planning process, family-owned schools can navigate the transition from one generation to the next with confidence and success, ultimately preserving their founders’ educational legacies.
Speaking during the Executive Investment Advisory Breakfast for Kenya Private Schools Association, Dr. Edward Mungai, Deputy Vice Chancellor for Planning and Development at Strathmore University emphasized three key points:
The importance succession planning for family businesses
He noted that developing a Family Business Constitution (FBC) was a critical component for family businesses as it sets the ball rolling for the development of a succession plan and the continuity of the business.
Professionalization of family businesses
Many family businesses still operate with some level of informality and lack proper operational structures. As such family businesses need to prioritize designing structures to align roles and responsibilities. This also helps hold family members accountable to their deliverables.
Family businesses are prone to disputes just as any other businesses but they tend to be very sensitive to disputes due to their very nature. Keeping this in mind, family businesses must come up with dispute resolution measures that do not affect either the business or the family.
Almost all companies start as family businesses, but only those that master the challenges intrinsic to this form of ownership endure growth, maintain collegiality and harmony as a family and achieve success in the business. In the process, they transition successfully across generations and proceed to prosper and diversify into multi-location and multi-industry businesses.
The Family Business Executive Programme aims to impart on participants practical skills and best practice insights needed to sustain family businesses through generations. Learn more about this Programme here
By Juliet Hinga