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The family business in Nigeria is consolidated, year after year, as the main asset of the Spanish economy. It is estimated that 0.7 million companies are family-owned in Nigeria, 56% of all companies. Its naturalized characteristics in the vision shared by a business family make this type of organization the largest generator of employment in Nigeria. Today they create 48% of private employment, with a total of more than 2.21 million jobs. Consequently, they are responsible for 41.7 of the GDP of the private sector.
However, in the last year, the family business has had to face different unforeseen events to continue maintaining its activity. They have had to move to current affairs in a context of uncertainty that continues to make headlines.
In this sense, given our history in the management of family businesses, at Confianz we see it necessary to analyze the five factors that guarantee the success of a company of these characteristics.
1. Plan the succession in advance
One of the main characteristics that define a family business is its intergenerational nature. In this sense, the correct transmission of the company to the next generation is a symbol of long-term vision and guarantees the continuation of the business.
Therefore, and for this succession to be effective, it is necessary to have early planning. Likewise, we must be clear in understanding expectations and take into account the perspective of each of the generations. Neglecting this aspect is a mistake that can lead to serious consequences in the future. However, those companies that have an external advisor have the advantage of incorporating an expert and neutral vision. This will help them properly plan the succession.
2. Preserve the entrepreneurial family spirit
Entrepreneurship is the foundation on which family businesses are based. The entrepreneurial character is intrinsic to companies of this type. And this is the main characteristic that must be inherently maintained in the company, whatever its size.
Having an entrepreneurial spirit makes a company focused on results and the self-confidence to achieve them. Likewise, it translates into a structure that is agile enough to adapt to changes. A very useful feature in recent months given the health crisis. It is the stability and desires to improve these companies, which has allowed their survival during confinement.
3. Be agile in decision making
As a general rule, the family business usually has quite efficient and effective management when making decisions. These types of responsibilities usually fall on the members of the family that runs the company quickly. It is one of the characteristics most related to the entrepreneurial spirit that defines them.
In key moments, like the one we have experienced in the last year, the fact of making quick resolutions and carrying them out immediately is what has allowed these companies to adapt to guarantee their continuity. On the other hand, in terms of growth, this is only possible by ensuring that a rapid decision-making system is maintained.
4. Reinvest profits in the company itself
One of the characteristics of family businesses in Spain is that they tend to reinvest profits instead of distributing dividends. Earmarking these profits for the company is what allows a family business to continue to grow. What should the profits be invested in? New projects, innovation, digitization of the company, internal training, sustainability… fundamental aspects that allow the organization to remain competitive in the market.
5. Have external partners.
Family SMEs need to rely on partners to grow. If they have an ambitious project, a structure limited to a small size will not allow them to tackle large-scale projects. For example, the jump to new markets, the launch of new products, or the opening of new sales centers. Therefore, the company must be open to collaborating with other companies or entities to achieve its objectives.
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