A new survey from PricewaterhouseCoopers (PwC), reveals that 17% of Kenya family business owners report having a robust, documented and communicated succession plan in place, compared to 15% globally.
PwC Kenya’s report themed ‘The values effect: PwC 2018 Family Business Survey’ however, shows that family businesses in Kenya have plans to grow over the next 5 years with 83% of survey respondents remaining confident of their businesses growth potential.
Thus, PwC with a core business mandate of delivering quality in assurance, advisory and tax services, calls for more family businesses to plan early and explicitly communicate with their successors.
“Succession planning is vital not only to safeguard business continuity but also to ensure the goals of the owners, the family and the objectives of the business are properly aligned over the medium to long term,” Michael Mugasa, Partner PwC Kenya and the firm’s Private Company Services Leader.
He added that “Developing, implementing and communicating a robust succession plan as early as possible before the actual handover will ensure a seamless transition from one generation to the next. A well-managed succession process can be a rallying point for the family firm, allowing it to reinvent itself in response to changing circumstances and find new energy for growth, diversification and professionalization.”
The survey was conducted in late 2018 and involved key decision makers in family businesses in 53 countries including 46 business leaders from Kenya. The report highlights specific trends, challenges, and opportunities for family businesses.
According to the study, family businesses in 2018, grew slightly by 74 percent compared to the global standard of 89%.
The Global Family Business Survey 2018, set corruption at 72% with other factors like skills, cost of raw materials and energy well as stiff competition from international firms.
The study states that 49% of respondents in this matter have written family business operation values with 48% of businesses having formal mid-term strategic plans compared to 1% with none.
Despite these challenges, family businesses have a competitive advantage in disruptive times.
“In a fast-changing and challenging business environment, family businesses in Kenya need to be able to think beyond the immediate demands of the day-to-day business and develop an informed view of the future. Digital technology is disrupting business; sustainability is becoming key to the conduct of business; winning trust is more important than it has ever been and millennials present an enduring demographic change,” said Michael Mugasa, Partner PwC Kenya and the firm’s Private Company Services Leader.
According to the survey, family business leaders are aware of the power of digital disruption. The need to continually innovate to keep ahead is important to 50% of Kenya family business owners, compared to 66% globally.