Subsequent to the first introduction issue which looked at three (3) variables (Ethics, Family and Religion as precursors of business success), this issue delves deep into Religion as an integral part of family business success and indeed business success in general. It will be presided by Ethics and finally Family.

IS RELIGION & BUSINESS INTER-CONNECTED?

The saying “What goes around comes around,” is an old idiom that has become such a cliché. It has often been referred to as a law of destiny. Isaac Newton further buttressed these wise words by adding “to every action there is an equal and opposite reaction”. Ignoring such infallible wisdom can be of grave negative consequence to any business. Since all actions have consequences, then it could be …
FAMILY
After having Religion successfully presiding over Ethics in our tripod “Family Business” approach, the last variable to delve into is Family. Family Business is a vibrant area of growing interest amongst various captains of industry such as Thought Leaders, Theorists, Entrepreneurs and Academicians alike. Empirical findings in extant literature seem to suggest that Family owned and run businesses are top performers globally (Poza, E.J., 2013). Furthermore, contemporaneous literature’s certitude posits that 200 family run businesses have a combined wealth of $1,3 trillion, (Forbes, 2015). In this list, Africa has its own very wealthy family businesses such as Pick & Pay; Founded in 1966 by South Africa’s Raymond Ackerman; Dantata Organization, founded in 1910 by Nigeria’s Dantata; Ramco Group, Founded in the 1940s by Kenya’s Rambhai Patel, amongst a host of other such very successful and very wealthy family businesses. Could this be the long missing “Higgs Boson Particle” in the business building block or DNA?

WHAT CONSTITUTES A FAMILY BUSINESS?

It is interesting to note that family business comes in various forms, shapes and sizes. It is, therefore, imperative to contextualize what we mean by family business. Family business in this abridged article includes Sole Proprietors, Partnerships, Limited Liability Companies; C & S Corporation; CCs and even Publicly traded companies, albeit family controlled. It should be noted that at the early stages of family owned business life circle, it is uncommon to have difficulties in attracting external skills, as many who can provide such skills may think that lack of family connection would have an adverse effect on carrier growth prospects. In most of these cases, many family owned businesses then rely strongly on the skills within rather than without. A family that has strong bonds, strong ethics and has its foundations on religion seldom finds this a business life threatening problem, as they mostly fill these positions from within, with trusted family members. Since it is often times difficult to attract skills from without, when still at the early life circle of business, family business should invest within in order to perpetuate the processes of growth. However, those who manage such family businesses should pay attention to the following 5 Cs of success:

1. Focus on Continuity – Invest your earnings in the next generation heirs instead of shareholder earnings and short-term investments. This ensures that there are financial metrics that will translate to significant growth and profitability;
2. Nature Connections – At the beginning of family owned businesses, most of the transactions with suppliers and clients are based on strong relationships. It is therefore important to nature these relationships as they will prove to be “growth building blocks” at the later years of business life cycle;
3. Invest on Community – During the early life cycle, only the immediate family members may be the only employees of the business. They run the family business on family values (Business Ethics and Religion). However, as the business grows, other extended family members are employed and the sphere grows, but within a set community model. It is important to harness this sense of community and values as it informs the organizational culture;
4. Harness the advantages of Command – Family owned enterprises have full command of their operations, which makes them very agile, involved and engaged. Innovation and strategic discussions do not wait for boardrooms and/ or a full quorum of the board. Instead, discussions sometimes are done over dinner or breakfast. Everything is on the go and time is never lost, leading to very agile enterprises;
5. Be Conservative – Research has shown that lenders are more un-enthusiastic in lending family owned businesses at their early life cycle. This leads them to have less leverage on their balance sheets, but at the same time leads to conservativeness. This becomes a plus during tough economic times. Studies suggest that this could be why most family businesses usually survive economic down turns as compared to non-family outfits.

Take Away

The level of commitment and integrity in family owned and run businesses seem to be very hard to replicate in non-family enterprises. There is succession planning or next generation planning. Furthermore, the ingredients of sustainability, namely, Trust, Authenticity; Agility; Conservative expenditure; sense of community or unity seem to be awash within these enterprises. The above assertions are further buttressed by the report from PWC, a well-respected international auditing firm, which avowed that SA’s family business sector will continue to be vibrant and ambitious amidst tough economic conditions. The report further posits that South Africa’s family businesses have maintained a constant level of performance over the last fiscal year. Furthermore, it is expected that 84% of these family businesses will see a respectable growth trajectory and 22% are expected to grow quickly and aggressively. For these reasons, it is important to note that family businesses advantages seem to far outweigh the disadvantages.