Why Many Family Businesses Struggle With Succession, and What to Do Early

Succession is a business problem and a family conversation. Starting early and putting structure around it protects both.

Across Uganda, many established companies are founder-led. The founder knows the customers, holds the relationships and makes the big decisions. That is a strength until the founder steps back, becomes ill or passes away, and nobody has been prepared to take over.

Common problems

• The successor is assumed rather than chosen, and may not want the role or be ready for it
• Family members have different expectations about ownership, income and involvement
• The founder holds all key knowledge and contacts
• Business and family finances are mixed together
• No documents set out who decides what after the founder

Start with the conversation

Hold an open discussion about what the founder wants, what the family wants and what the business needs. These are different questions. A neutral facilitator can help people speak honestly.

Separate ownership from management

Being an owner and being a manager are different roles. A family member can be an owner without working in the business, and a non-family professional can run it. Decide the criteria for senior roles and apply them fairly.

Build the structure

• A board with at least one independent member
• A family charter that sets out expectations and how disputes are resolved
• A shareholders' agreement and an up-to-date will
• Written job descriptions and decision limits for senior managers

Transfer knowledge and relationships

Introduce the successor to key customers, suppliers and bankers over a period of years. Document processes that live only in the founder's head.

A good plan can take two to five years, so the best time to start was yesterday and the second best is today. We facilitate succession planning and governance design for family-owned businesses. See our organisational development services.