KAMPALA — Every business owner starts up a business with hope that it will thrive, however this is not the case with majority of the family businesses in Uganda as Dr. Peter Kimbowa, a global leadership catalyst has said.
Dr. Kimbowa was making a presentation at the annual Uganda Baati Dealers’ Conference on July 15, 2022 at Speke Resort Munyonyo under the theme, “Partnership for shared success.”
According to Kimbowa, Kenya and Tanzania’s family businesses succeed compared to those started up in Uganda.
“I am a keen observer of families and family businesses. Family business has been a sad story in Uganda but not too sad in Kenya; I think Kenya has done better as well as Tanzania because I have been in these three countries discussing this very topic. Families constitute about 70% of all the businesses in this country unfortunately it is very difficult to move from one generation to another. About 90% of the family businesses do not make it to the 3rd generation,” he told participants at the conference.
He, however, noted that the success of a family business is not determined by size rather the commitment of the members running the business.
“All big companies start as small but family businesses have had a different way in which they have excelled because of their togetherness and commitment. Founders of businesses have an exaggerated sense of self and opinion; they would rather have fun at family parties than talk about businesses. You should know that in a family conversation, business should be part since it brings a different form of pride to have a family working together,” he said.
Kimbowa added that for a family business to thrive there is need to set up rules that govern it.
“Business is supposed to bring family together, family sits together over dinner and the head of the family says the nice things that happened to the business. You need to come up with the family code of conduct, the rules that govern the family. The idea is we should leave something that should never die even when ourselves will die as the law of nature is. We have to bring the family together so that they can have a sense of ownership for the businesses and are able to take responsibility when need arises.”
He said the rules are vital as they contribute to the ability of the business to transition from one level to the next and last for generations.
Mr George Arodi, Business Head at Uganda Baati explained that in order for families to interest the second generation into family businesses, they need to groom them from childhood while considering their interests.
“Many families struggle to have their businesses strive because they don’t interest their young ones in things they are interested in. The course you choose for your children when they are young will determine what they become in future. Creating interest amongst family starts at a young age,” said Arodi.
The Chairperson Construction and Hardware Association (CHADA) Mr Mutyaba Abbas highlighted the culture component as one of the reasons why family businesses do not survive beyond the first generation.
“There is a lot of extravagancy and impatience in the Ugandan family businesses. It is essential to instill the right culture in our family to enable them work together towards ensuring that a family business continues to stand the test of time. Teach children how to share, be flexible and open minded so that our businesses can survive to the next generation,” he said.
On the other hand, Mr Peter Kyambadde, Patner, Tax and Regulatory service at KPMG Uganda noted that one of the disadvantages of having family members in family businesses is the lack of shared goals and vision for the business.
“When we are starting a business, we have a vision, a passion to ensure that the business moves the way we want. We have specific things which we believe should be done for that business to continue thriving, however it is important to note that our children or the other family members working with us do not have exactly the same passion and the same vision that we have,” said.
Kyambade said it is important as business owners to think through certain specific structures that they need to put in place which determine which people they let to carry on the family business.