Let’s Talk Family Business [with Nike Anani]
Bekeme Masade-Olowola(Host) : Hi Guys are you good, are you blessed, are you having an awesome week so far, I know that there are challenges but you are here and alive so I assume all is going well and I can get better or it will get better, my name is Bekeme and you are listening to the Good Citizen radio show, the show is brought to you by CSR-in-Action which means quite a few things to different people but I would tell you that our focus is on sustainability and good governance in Nigeria, and its sponsored by ACT Foundation a grant making organization established in 2016 to support non-profits in health, education, entrepreneurship and leadership and the Good Citizen show is really about driving good citizenry leadership especially at a time like this with COVID-19 ravaging the world that we live in, now is the time to test your resolve as a person who realizes the things that you do would have a much bigger impact on the economy so are you staying home? Are you trying to maintain social distancing, people who aren’t doing this are getting infected by the virus all over of the world so you need to do your very best, if you must go out, if you must make a living try to use a face mask and keep safe. So today on the show we are going to be talking about what we would celebrating this week, The International Day of Families as celebrated by the UN, it’s been celebrated since 1990’s and we are going to use this opportunity to talk about family businesses it is especially important in Nigeria today that we talk about family businesses, many of the businesses that we have will not actually be categorized as SME’s but actually we have many micro businesses that have the potential to be huge so huge. At a times like this when the world is different, when the world is constantly revolving we have to think about what we need to make a living, a long time living not just for ourselves but for our generations to come. So families as we all would agree are the foundations of society, so we spend our formative years growing up with families and we must celebrate ourselves. The United Nations founded this in 1994, in other to celebrate the importance of families, people, societies and cultures around the world. I would say that it is easy for a man or woman to break away from their ancestral home and start a business through sheer vision and grace so you say this is what I want to do and you stay focus and you drive and you build that entity that you want to build and it is a different thing however if you decide that you want to run this enterprise with family members because as we all know we are different, we may love each other as family but we are inherently different. You bring up children in the very same environment, go to various schools and thought the same values and we turn out differently. So it can be very hard actually to maintain a business with family members, it can be even harder to see that the next generation carry over that family business however family businesses are very important and are global they are all over the world and they can be noble trans-generational heritages. A common obviously feature of these businesses is that business and ownership are intertwined, however family businesses can be small, medium sized or large, listed or unlisted, and all of that and in Asia we have many examples such as Samsung, Tata Group which is my favorite started in 1968 and which has become a conglomerate and started viaing for leadership in certain areas and its gone through family, it remains in family hands and they have managed to build themselves a formidable name in India that is the Tata family members and we also have in North America we have Volkswagen, Nike, Michelin, LG, Walmart and another favorite of mine Mars, everybody knows Mars and it still remains a family business. In Europe we also have very many family businesses they may not be as prominent as some of the names that we have called but they have been in the family for many years and they keep on making many products and keep on being resilient and keep on doing the things that they need to do which is in essence providing a source of income for the family and even in Africa and if you bring it down to Nigeria, The Guardian newspaper comes to mind, Eleganza, FCMB, Inspiration FM quite a few of these companies are first generation businesses and it is what they do now that would determine if these businesses would carryon to the next generation. According to Boston Consulting Group’s analysis, family businesses are not only entities with local focus and familiar set of problems but includes sprawling corporations that accounts for more than 30% of all companies with sales in excess of 1 billion dollars. And as I said earlier these family businesses often times constitute a huge chunk of the informal and micro sector.
So, they are usually started when a spouse, parents, siblings, children or other family members come together and say there is this unique opportunity and I think that we should rally and make it work. However, it is popular to be said that it is only one in three family businesses survive to the next generation but that is not bad statistics considering that many businesses and other start up too don’t really last, I hear that in Silicon Valley only 20% of the plans actually make it off the ground and many of those die of in the first five years so usually when all these family members come together they have all these big dreams but it doesn’t always happen. Nevertheless, from the words of Ursula von der Leyen, who is the President of the European Commission, family businesses are built not solely on shareholder value or the very next bonuses but it is built to last, to pass down to generations, and usually there is a focus to providing a fair living to employees, and there is a reflection of this passion for quality, tradition and innovation, and what that means is that there is somebody in the family who usually is passionate about making sure that this business last, it is not about making money now and then selling it off to somebody or screaming other people off.
According to Harvard Business Review, the performance edge that family businesses have over their non-family businesses is their 1) dogged pursuit of operational excellence, 2) Their long-term view of investments and relationships, 3) Their stay in ownership control to do things their way, 4) their focus on persistent improvement and innovation, 5) Their efforts to develop loyal stakeholder relationships, 6) Their efforts to build key talent in select individuals, and 7) Their resolve to carry lower debt, and build financial stability. Most times family businesses are not just about the number of investors who want to just quickly acquire wealth in other to start living large but because they want to be around a long time and they have to be very careful about how they expose themselves but one thing that comes to mind when people think about family businesses is how do they then settle feuds? Well that’s why we would be having today’s discussion and we would look at suggestions to prevent such eventualities, negative eventualities of family businesses, including setting boundaries, establishing clear and regular methods of communications, dividing roles and responsibilities, Treating business like a business Putting business relationships in writing, avoid providing “sympathy” jobs for family members, Drawing clear management lines, Seeking outside advice sometimes, developing a succession plan, and requiring outside experience first. So family business we agree focus on resilience more than anything else, they don’t look at the immediate gain but often times the investment would be 10 – 20 years its not like hey give me money now now ofcourse there is that because people needs to be fed but if you want the business to be fed there is and then you are thinking of your children and children children and you thinking of doing things and maintaining business relationships and that is also a very good thing and critical to values of our show, if you want to make sure and keep on doing business a long time.
Anyways to help us break this down to the barest minimum to understand it as clearly as we need to, to unpack it so too speak, we have a budding business consultant Nike Anani, she is a NextGen Coach and Mentor, focused on building multigenerational African businesses and multigenerational wealth. She is the promoter and CEO of Nike Anani Practice Ltd and she assists second-generation family members aka NextGens in maximizing their leadership effectiveness for service in the family business and discovering and pursuing their unique purpose. Nike has almost a decade of experience working in African family businesses, both as a co-founder and separately as a next generation family member in her parents’ businesses. She is the author of “Building Resilient Family Enterprises” and co-founder of African Family Firms, a pan-African association of family businesses. And Nike comes with qualifications she is a member of the Institute of Chartered Accountants England and Wales, Institute of Directors, Family Firm Institute and a fellow of the Institute of Management Consultants. Nike is an Economics graduate from University College London, UK. She sits on the boards of several companies.
Welcome to the show Nike, thank you so much for coming on the show
Nike: Hi Good evening, thank you so much for having me on the show today, I am grateful
Host: Alright Nike, to cut down to the chase so family businesses are known to exist for the best interest of their owners no dispute there. Should then the sustainability plan for such businesses then be handled fully by family members, should it be partly handled by them or should it be fully outsourced? In a bid to ensure that this businesses are properly run.
Nike: So Family businesses are simply businesses where we have two or more family members that are involved and where the majority control lies within the family, so they are a variant of other types of companies that we may see such as corporates or SMe’s or institutionals, but doesn’t preclude them from being SMe’s, corporates or institutionals. I would argue with your opening line about family businesses being known to exist for the best interest of their owners, the most successful businesses exist only for the best interest of their stake holders and central to stake holders are the communities which they serve, so this ownership mindset where other stakeholders interest and perspectives are not taking into consideration, its very prevalent but its very detrimental to a lot of businesses thriving. That said, a sustainability plan essentially addresses how would the family business be able to sustain long term and in the context of a family business the discussion is centered on how would we pass on this business and its assets and the family assets to the next generation, the children and to the grand children, so in Nigeria for instance only two percent of family businesses would survive when the founder dies and such a plan is complex so it looks at business continuity succession planning, family governance, corporate governance and diversification etc. so family needs professionals to guide them through the process and I saw guide because even professionals don’t have all the answers, I believe it is a collaborative method between family and advisors and family business consulting is not a one size fits all or just a copy and paste of what you did for Balogun family and give It to the Okonkwo family, it doesn’t work like that because we are also different, our values, histories, legacies our desires are different and it impacts on what we want for our business, so the solutions are largely driven by the client’s needs and wants and it really has to be a joint effort between advisers and family.
Host: OK Nike, just to clarify, I wasn’t saying primarily for the owners per say but I mean its there to serve a purpose for the owners but you have struck a very key cord of sustainability when you said that they need to consider external stake holders because business cannot thrive if its stakeholders and external stakeholder are not happy with it and then you know the point that you make about only 2% of family businesses surviving beyond the founder’s death is really worrisome and I wonder how we can change that but then again with next gen coaches like you there is a solution, so basically what Nike is saying is you can stay at the helm of affairs but you should also get an adviser and its not a one size fits all type of engagement.
So Nike Prior to your engagement in the family business(es) you manage, you had worked for different organisations and garnered a wealth of experience. Does this mean that there is a need for individuals aspiring to venture into managing family businesses to first acquire exposure and experience elsewhere? What works best for the next generation of owners: Do you think that they should grow within the ranks of the family business, assuming leadership from the get-go straight out of school, or honing their skills within independent businesses?
Nike: So I work in my parent businesses and prior to doing so I worked in Delloit in London for three years in corporate tax international and I qualify there as a chartered accountant, my experience and exposure from delloit has been invaluable whilst working in the family business, similarly I encourage next generation to pursue experiences not just work experiences but also life experiences outside of the family businesses first as it develops your confidence and character. That you know for yourself that you are able to be financially independent without your parents gives you a sense of satisfaction and pride and it enables you as next generation to come into the family business divorced from all manner of insecurity and you’re ready to just get into the trenches to serve because that what’s you are, a servant in the family business. So those aspiring to work in family businesses as I always say consider work experiences, life experiences, associations to join, company you keep is really important and also your skills set
Host: Great, I also thought it was a good idea to atleast garner some experience else where were nobody is babying you or anything like that. But in this post covid-19 era do you think family businesses would be worse hit since the business structure are assumed to be often centered around the owners? For instance, in the case where an owner or owner(s) are gotten “down” from illness, do you see it hitting many such businesses hard, and if so what are your suggestions for mitigating such from occuring?
Nike: I actually think family businesses have potential to do better than none family businesses because typically family businesses are more flexible, agile, nimble they are able to take faster decisions than blue chip companies that have a lot more bureaucracy and administration and in this fast paced COVID era the ability to make quick precise decisions is really key, so there was a study by Harvard Business review that looked at extensive evidence from the US, Canada and Europe and concluded that family businesses outperform than none family business and piers during adverse economic times but back to your point about ownership where the business structure is often centered around the owner, family businesses need to think about succession planning on three different levels so typically a family business set up by a founder may be the head of a house hold the father or the mother and this founder owns shares in the business and works in the business but as we move into the second generation we need to think about succession planning on three different levels as this three different roles maybe performed by three different people or group of people or perhaps be performed by one person but the point is that we need to think about 1) the management of the business, so what is the business continuity plan, disaster recovery, who would be the successor of the business is it the child of the founder and is that person ready? Because he would need grooming and preparation, coaching and mentoring and he could need to consider joining a community of other next gen like himself for support for guidance and just because it can be a very lonely journey. The second thing we need to think about is the ownership of the business, who would ownership go too? Is this legally sound and have been looked into to make sure its task efficient and its structurally sound, do we have trust foundation to holding companies to facilitate an easy transfer of asset and the business to next generation, a huge problem we often face in this part of the world for instance is land and property, the titles may not be perfected and often this assets face political risk so the ownership of these assets may be challenged when the founder is late or may even be revoked so we need to ensure that the asset of the family are really well protected and lastly leadership of the family so who would lead the family unit in the next generation you know typically in most cultures in Nigeria we just typically passes this roles and responsibility to unto the oldest boy but is it what the family and founder really wants? And has this been communicated and explained to all the family members we need to think about family governance plans and we need to document this so that we have clarity, collaboration among family members
Host: Ok, so owners of businesses, family businesses you need to be clear as to what happens after your demise or if you fell sick or anything like that so as a parting shot Nike what is the what is your advice to individuals planning to go into setting up and managing family businesses, as well as those already into it? What are the three key things they must know or do?
Nike: Our stories are different just as no too family are the same, no two family businesses are the same however I always encourage all family business founders to consider 1) building with an end goal in mind so nobody embarks on a construction project without architectural plans and all that so you need to have clarity on what are your aspirations, do you want a legacy family business that would be something your grandchildren and great grandchildren still benefits from if so just as in construction we need to make sure that we build sturdy robust foundation from inception 2) I would say seek community of other family businesses. There is an African proverb that says if you want to go fast go alone but if you want to go far go together, there is something powerful about peer networks. Traditional education thought us that the teacher is the most important person in the classroom but I would argue that the students are equally as important because we have a lot to learn from our peers so seek community of other family business in similar situations as yourself share notes, gain support and build your network and then lastly I would say seek outside help where necessary, a lot of business owners go through challenges seasons but often are ashamed to ask for help and just suffer silently and the truth is there is nothing new under the sun what you are going through somebody else has and having an outsider that has seen different scenarios, and is an expert at this can be very helpful in guiding you to what the particular solution may be.
Host: We are always very short in time but I can say that Nike that was a very useful learning experience thank you so much for coming on the show, I hope to have you next time
Nike: Thank you so much for having me today, I have had an amazing time.
Host: I hope that many have learnt so much from this, so Nike’s three tips is: You must build an end goal in mind, you must seek community of other family businesses be it a boy or girl whoever you are, you don’t know it all, so ask and then you know buttresses her third point, seek outside help where necessarily you cannot know it all alright there are always different scenarios. So thank you so much again Nike for coming on the show and let’s remember that we can order products from our partner Ryan John, be the face of that special event, be the best instagramer with those lashes from Ryan John, Just follow @ryan_john or @ryanjohnbeautystudio on Instagram
Still on the COVID-19 palliative distribution, the third batch of relief packages have been sent out to more families and we have a had sponsor Five Foundation which donated the sum of N250,000 to our cause we are grateful to them and to our contributors that we announced last week and like I said we had a 1500 cases of drinks from Diageo thank you also. We are distributing this in the Igboefon, Jakande and Ajiron areas during the cause of the week and we ensure that more people need that sort of support, follow us @goodcitizenng for more information about what we do and tune in every Friday at 8pm on Inspiration FM 92.3 and ask a friend, colleague or family member to listen to the show, thank you for tuning to the Good Citizen radio show, I am your host Bekeme always here to give it to you life and direct, listen to us and you would never ever regret it, Thank You to ACT Foundation for doing what you do, God bless you all be careful, have a happy weekend and happy International day of families.