It is widely known that business families are currently experiencing the largest wealth transfer in recent history, with over $84 trillion being transferred from older to younger, next-generation, rising leaders over the next 20 years.
Through discussions with business family leaders there is a lot of uncertainty regarding family matters and outside (economic, political, social etc.) factors, which combined is causing confusion mixed with impatience regarding the next steps required to sustain and grow the family business, the family wealth and the family legacies.
Current business family leaders often say, “I can’t sleep. I don’t know who can take over the business and managing the wealth. And frankly, I don’t know what else there is to do.”
The next generation of business family leaders say, “I’m tired of waiting. I’ve done everything I’ve been asked to do. Business cannot carry on as it has up to now. Why are they not considering my new ideas and how to grow the business. I don’t have a voice. There is a perception I still need approval from my parents or the owners.”
South African business families are part of the great wealth transfer and are as concerned about getting it right with the generational leaders are sharing the same thoughts and frustrations.
With this in mind, business family leaders need to find a balance between tradition and innovation, and in turn to create a legacy that ensures the success of their business(es) across generations. This question lies at the heart of the recent STEP Project Global Consortium and KPMG Private Enterprise’s comprehensive study on family business legacies. Through a global survey and regional roundtable discussions with family business leaders, the study delves into the essence of legacy and its impact on business performance.
Driving sustainability and performance
Legacies are not merely relics of the past – they are tangible and intangible assets that drive strong financial results and sustainability performance. They reinforce the emotional bond that forms the family’s identity, serving as a source of inspiration and innovation.
The study reveals a compelling link between…
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| Alan Barr | Partner | mail me | | Creagh Sudding | Associate Director | mail me | |
| | KPMG South Africa | | |
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Read the full article by Alan Barr and Creagh Sudding, KPMG South Africa, as well as a host of other topical management articles written by professionals, consultants and academics in the August/September 2024 edition of BusinessBrief.
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Related FAQs: Family business
Q: What defines a family business?
A: A family business is typically defined as a family-owned enterprise where decision-making is influenced by multiple generations of the family. In such businesses, family members often hold significant ownership and management roles, which can affect the family dynamics and business strategies.
Q: How can family business consulting help family businesses?
A: Family business consulting can help family businesses by providing expert guidance on issues like succession planning, family governance and business strategy. Consultants can facilitate discussions within the family and help navigate the unique challenges that arise in a family-run business.
Q: What are the common challenges faced by family firms?
A: Common challenges faced by family firms include succession planning, balancing family dynamics with business operations and overcoming conflicts between family members and non-family executives. These challenges can significantly impact the long-term success of the family business.
Q: Why is succession planning important for a family-run business?
A: Succession planning is crucial for a family-run business as it ensures a smooth transition of leadership and ownership to the next generation. Proper planning can help mitigate conflicts, preserve family legacy and maintain the business’s operational continuity.
Q: What role does family governance play in successful family businesses?
A: Family governance establishes a framework for decision-making and conflict resolution within the family business. Effective governance structures help clarify roles, set expectations and create a transparent environment which is essential for the sustainability of the family enterprise.
Q: How do family dynamics affect the performance of family-owned businesses?
A: Family dynamics can significantly impact the performance of family-owned businesses. Positive family relationships can lead to enhanced collaboration and innovation, while negative dynamics may result in conflicts and hinder decision-making, ultimately affecting the business’s success.
Q: What are some best practices for managing a family-run business?
A: Best practices for managing a family-run business include establishing clear communication channels, defining roles and responsibilities, implementing a formal governance structure and engaging in regular family meetings to discuss business issues. These practices help in aligning family and business interests.
Q: How can family businesses around the world learn from each other?
A: Family businesses around the world can learn from each other by sharing experiences, best practices and strategies through networking events, family business associations and academic resources. This collaboration can foster innovation and provide insights into overcoming common challenges.
