Good succession planning vital to family business

Family-owned businesses

Family-owned businesses are the backbone of many economies.

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Family-owned businesses are the backbone of many economies. They are renowned for promoting innovation and creating job opportunities, and Kenya is no exception. However, their success pivots on strong leadership, a sound business model and meticulous planning for the future.

Succession planning is the roadmap for continuity that ensures generations’ hard-earned legacy is preserved and driven forward into the future. Yet, amidst the multitude of business successes and operational challenges, it is one crucial aspect that is often overlooked.

In Kenya, the consequences of neglecting succession planning are all too familiar. We often see how the absence of clear legal frameworks and comprehensive estate planning of respectable families and their businesses has led to ownership disputes, hefty tax burdens, and operational disruptions following the passing of a family patriarch or matriarch, fracturing family bonds cultivated over generations.

But why do families often overlook the importance of succession planning? Some of the reasons are a cultural reluctance to confront mortality, a lack of awareness about the complexities involved, the fear of relinquishing control and the misconception that succession planning is a task best left for the distant future. While these fears are powerful deterrents, especially in Africa, the consequences of inaction are far worse.

Family bonds

A well-defined succession plan will strengthen family bonds by outlining ownership transitions, minimising tax burdens, and ensuring smooth handover through strategic estate planning—with minimal business disruption.

Founders of family-owned businesses should seek expert guidance to navigate the intricacies of succession planning. Advisory firms specialising in estate planning and business succession offer invaluable assistance in crafting tailored strategies that align with each family-owned enterprise’s unique needs and goals. From drafting wills and trust agreements to devising tax-efficient transfer mechanisms, these firms play a pivotal role in facilitating proactive planning and maximising the benefits of succession.

As the Good Book says, a good man leaves an inheritance to his children’s children; the current generation needs to ensure mechanisms are in place that will create an enabling environment for the next. Through succession planning, businesses can ensure that the inherited values of the family continue to be reflected in the company and vice versa, providing the family’s legacy and shared purpose transcend generations.

As Kenyans continue to set up economically strong family businesses, they must consider robust succession planning continue. It is time for these businesses to recognise the value of planning future-proofing and proactively take steps to secure their legacies for future generations.

Ms Kivuva is a co-founder and partner at Tarra Agility Africa. [email protected].