Running a family business? Pass the baton early

A recent report by Bloomberg indicates that the world’s wealthiest family, the Waltons, gets Sh413.6 million richer every hour. 

The Waltons are behind Walmart Inc, an American multinational retail corporation which Sam Walton founded in 1962 and have managed to preserve the wealth by passing it to the next generation.

For most wealthy families, succession planning is a top concern. According to a recent study, people born into wealthy families define success as passing the businesses on to the next generation in as good or better shape than when they inherited it.

“Continuity is critical because it supports the legacy of both the family and the business. It also has an impact on employees and community and is an important facet of supporting growth and longevity,” the 2018 PwC Next Generation Study says.

The older generation passes down important business lessons to heirs thus ensuring continuity and growth. They also take their kids to the best schools.

“The preparation starts from when you are born. I’ve been going to the office with my grandfather for as long as I can remember,” one entrepreneur told PwC.

Unfortunately, many family-owned businesses in Kenya collapse after the founder’s death.

According to 2018 PwC Family Business Survey, only 17 per cent of local family businesses have a robust, formalised and communicated succession plan in place.

The survey notes that the ability of family firms to survive across many generations lie with how well the current generation prepares the next generation to manage the businesses.