x Abu Dhabi, UAEMonday 24 July 2017

Failing to plan business succession is courting disaster

The Life: Many entrepreneurs in the region fail to create succession plans for their family-run businesses, which can be disastrous for relationships.

Many entrepreneurs in the region fail to create succession plans for their family-run businesses, which can be disastrous for relationships. Maarten Wouters / Getty Images
Many entrepreneurs in the region fail to create succession plans for their family-run businesses, which can be disastrous for relationships. Maarten Wouters / Getty Images

When it comes to small businesses, the topic of succession usually takes a back seat to conversations about family preferences and petty prejudices.

Meet "Nasser", an astoundingly successful entrepreneur who is a relative of mine.

Nasser has been blessed with a brilliant mind, an exceptional capacity for recognising opportunity and an astute grasp of international investing.

He owns plantations, properties and factories in Africa and Asia.

Alas, he lacks the ability to create a proper succession plan.

His situation is further complicated, as he has three wives, each of whom has children and lives on a different continent.

Many of these children have not met each other and would not know how to communicate with each other because they speak different languages.

Yet those of Nasser's sons and daughters who are in communication with each other are already unhappy and starting to bicker.

Who is going to get the land in Uganda?

How about the factory in Malaysia?

And who gets the buildings in Sharjah?

The children are growing suspicious of each other and are losing respect for their father.

The heartbreak is that it is likely to become far worse after Nasser dies, as family members often band together into factions and call in the lawyers.

In the end, Nasser may leave behind a legacy of familial disintegration, hate and many years of painful litigation.

Nasser is an extreme example of many entrepreneurs I see through my work.

The scale is always different, but the dynamics are the same: the head of the family's fortune tends to dominate, which can lead to chaos down the road for the company and, more tragic, for the family and the generations that follow.

Another entrepreneur, whom I'll call "Ammar", is on the other end of the succession planning spectrum.

He is pushing 60 and has lung cancer.

He called in his sons and daughters and told them that he expected many years of life ahead of him (God willing).

But that night, just in case, he thought it would be good to have a frank discussion of inheritance and governance.

And with his lawyer in the room, he detailed a systematic plan of succession: whom he wanted to lead the company and how much each of the children would be entitled to.

He also detailed his path for kaizen, or improvement, including new accounting procedures, growth strategies and business principles of transparency and the nurturing of a positive and healthy corporate culture.

I wish Ammar would have a talk with Nasser.

 

*Sana Bagersh is the chief executive of the marketing consultancy BrandMoxie, based in Abu Dhabi, as well founder of Tamakkan, which holds seminars for entrepreneurs