Customized Family Business Workshops

Customized Family Business Workshops

An array of family businesses including agents, dealers, franchisees, and distributors draw their livelihoods on contractual arrangements with large service providers and manufacturers.  This includes your neighborhood bank agent, mobile phone credit or Coca Cola vender, fast-food outlets,automobile dealerships, pharmaceutical wholesalers, petrol stations – and these are just a few of the industries in which small, independent firms, many operated by families and owner-managed benefit from formal ties with big corporations.
To the owners of most of these agencies, distributorships, dealership, nothing is so worth the blood, sweat, and tears they have poured into the business as the prospect of passing it down the family line.  This arguably, is the dream of many distributors – owners – but for some it’s become a nightmare.
To be extremely blunt, the situation is not made any better, as it is only in exceptional circumstances, that these businesses receive encouragement to plan for succession, least of all, from the company whose footprint they represent.  A fact validated by a typical spine-twister response culled from a recent discussion with a commercial manager “that is their family issue it’s not our concern.” He was damn right!
Being “a messy area” no doubt, the company doesn’t wish to be involved. Said another way, the corporate parent deals with succession of the dealer principals by specifying in their contract that a ‘suitable successor’ (suitable is usually left undefined) must be found in order for the franchise / distributor agreement to be renewed beyond the tenure of the current principal.
LEAD, FOLLOW, or….
However, let’s distill this further, and here resides an opportunity to insulate the relationship with the distributor / dealer, cement loyalty and spur long term growth. The catch phrase being continuity. If we considered distributors as part of the ecosystem of business partnerships within which the parent company operates. In so adopting a “hands-off policy” on the question of continuity / sustainability in the business of the suppliers, dealers, distributors and more is invariably short-sighted.  A fact vividly noted, when there is an abrupt departure of the “keyman” from executive roles, and the often painful business disruptions that kicks in. A fact repeatedly witnessed across industries.
So let’s say, the best businessman, whether in retail or wholesale business, is a man who lives, eats, and breathes in the territory that he’s servicing. He develops a camaraderie with his clients, an understanding, and commitment that only an entrepreneur operating in his own backyard does, enhancing their competitive edge and customer “stickiness.” This is an agreed critical ingredient for success, and which is confirmed time and again. And this is “capital.”  It is conventional good business, therefore, that the best way to keep “this capital” employed productively from generation-to-generation is in the hands of another entrepreneur, who doesn’t have to go through the rigors of capital accumulation and leverage him or herself. Yet again, the word pops up, this time its traffic light red – continuity 
Need I say more? The sponsoring company therefore, could tweak this as the magical formula for creating a special relationship between themselves, the dealer / distributor and the serviced client. At best, it is a win-win for all parties elevating the relationship a notch higher, insulating distributor loyalty and enhancing depth in commitment.  It is therefore safe to say the corporate parent company should adopt an evolving strategy of encouraging distributors to develop a beneficial long-term investment perspective as a partner of the corporate parent.
A case therefore,exists for nurturing continuity of this “capital” and for it to remain in the family for generations. However, the dealer principal must undertake to achieve specific clear milestones in identifying a next generation with “a safe pair of hands” to keeps-up with the white-hot pace of doing business required by the sponsoring company and key metrics of client experience.
Working at the “heart”
“If you are a sponsoring company and need something deep, meaningful, turnkey, and low-cost and with immeasurable advantage to add to your distributor / dealership package, then here it is – a Owner Development Program.
Read more; Customized Family Business Leadership Program (FBL Program).
Paul Ouma, a family business expert at Strathmore Business School calls it the identification of “one pair of eyes” (the next generation replacement) from within the family to succeed the Dealer Principal. He adds, the “One pair of eyes that the corporate parent can counsel, one pair that can make decisions. Because the retail and wholesale marketplace, can’t be operated by a committee of siblings.”
The process involves creating awareness of the issues involved in maintaining continuity within the family.  In addition, there must be a phase for putting in place some of the tools necessary for planning, i.e. family council he recommends.
To be effective, such a development program by a sponsoring company ought to possess a number of insights.  In addition to ensuring the “successor” possesses experience learning the ropes, a sound education which prepares them with essential skills for future roles is a pre-requisite.  With some general work experience under the successor’s belt, they need to demonstrate they have learnt the relevant industry, but not necessarily under the same roof, but  industry experience exposing them to any available learning opportunities and experiences should be high on the agenda. And these would be mere sweeteners of the program as more is involved.
Contingency plans 
Occasionally, it can be deeply disappointing as sometimes even with the best of intentions, the education and preparation, you can possibly offer, an intended successor simply doesn’t have the capability (or willingness) to run the business. This should not end with resentment and estrangement – there are options to consider:
As an owner, one can still secure the future, by surround your heir with savvy senior leaders who function as advisers, reliably lending the business “wisdom gems,” necessary to keep the business successful and profitable, while retaining family ownership. Your successor would have limited responsibility in this arrangement. In addition, you can consider having a – governance accountability board — perhaps, as an owner, you can keep your” successor” in check with this oversight board that would negate any poor decisions or unwise moves and more.  And this is just the beginning of putting an enduring structure in place.
Read more; World class SME and Family Business
Read more Family business Learning Series
Therefore, whereas the significance and strategic assets of family-owned / owner-managed businesses are often underappreciated by sponsoring companies. With attributes such as engineering excellence, manufacturing efficiency, and quality being replicable and rapidly becoming givens; everyone is going to need them to be a player. Indeed, most companies deficient in those areas have already disappeared.
Therefore with the ongoing disruption in distribution, quite frankly, good fortune will most likely favor companies that leverage on the strategic assets of family-owned / owner-managed distribution networks.
Peter Ouma Muga – A trainer and accomplished writer on family business management with over 18 years’ experience in family and blue-chip multinational consultancy firms and companies.  He possesses an MA Psychology specializing in Organizational Behaviour, and heads human capital at Institute For Family Business (IFFB).
Does Your Family Business Need Help?
Institute For Family Business (IFFB), has extensive experience assisting family businesses. Through private family business advisory support services, Succession risk audits, specialized topic-focused sessions of Family Business Learning Series, IFFB continues to assist family-owned businesses in the region thrive from generation to generation.
For Information on how to attend the Family Business Learning Series: 
You can contact us on :+( 254) 722 259 855 or + (254) 732 998 655 or email info@institutefamilybusiness.co.ke

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