The Importance of Family-Owned Enterprises

In many countries family-owned enterprises (FOEs) are the backbone of the economy.

Research provides ample evidence to show that globally, FOEs provide employment to millions of people, serve as financial and social anchors in many communities and generate a sizable tax revenue for a country.

It is said that children who grow up in a FOE are likely to possess entrepreneurial skills from an early age, and this is evident in Namibia as the children of entrepreneurs often assist or work in the FOE from a young age already.

This is not viewed as cheap or child labour, but rather as teaching the ropes to children as part of a business continuation strategy and succession plan.

This country’s entrepreneurial landscape has been shaped by historical, cultural and economic factors.

That is why the ownership and managerial control of FOEs is presently more prevalent in some ethnic groups than in others.

However, there is a shift as people across the country’s demographics are now entering the business arena, unlike their parents and grandparents, who were not allowed to engage in certain commercial activities.

Routinely working at the frontline of entrepreneurship in Namibia’s 14 administrative regions, I would venture to say that FOEs are also important wealth and job creators in this country’s economy.

There is no town that I know of where FOEs are not dominant in the local economy in sectors such as professional services, manufacturing and retailing, beauty care, hospitality and tourism, accommodation and restaurants, transportation and agribusiness.
Some older, larger and more established FOEs even have subsidiary firms and branches countrywide, like Namibia’s largest private company, the Ohlthaver and List group, or the Pupkewitz group, among others.

Look in your own community. You will be astounded by the number of FOEs when you do a count of who is providing goods or services in your own locality or town.

Namibian entrepreneurs and their FOEs demonstrate resilience and creativity.

But clearly things are not always hunky-dory, as I saw recently at Lüderitz and Walvis Bay.

A family at a scrap metal dealership in the southern port town are a model of how an FOE should be structured, owned and managed.

On the opposite side of the success measuring spectrum is a Walvis Bay-based garment-making FOE at risk of splitting in two due to toxic sibling rivalry, that has even resulted in litigation.

From my experience, FOEs that excel, thrive and prosper have a value system with clear expectations and a shared vision for the future that unites the family and guides them in their decisions.

Leadership principles are rigidly applied with roles and responsibilities clearly defined.

Personnel are employed for the position and jobs are not necessarily created for those who are merely a part of the family.
There is cohesion and interaction built on mutual understanding, respect and support.

Performance is managed, and when the inevitable tough call must be made, it is made without fear or favour.

In the event of conflict between family members, nepotism and the absence of an organisational structure, vision and values, FOEs will be unable to adapt, and will inevitably result in the business’ demise.

• *Danny Meyer is reachable at danny@smecompete.com