Here is why most family-run businesses in Uganda do not succeed
Posted Tuesday, September 24 2013 at 01:00
For a long time I have been toying with this puzzling question: Why do Ugandan black family run business die with their founders? These businesses fair worse than other racial background businesses such as Ugandan Asian or Ugandan White businesses.
A large number of these family-run businesses lack professionalism or the capacity to attract the much needed skills to support their growth and expansion; especially those founded by under skilled entrepreneurs. Most operate a commercial type extended family where most employees are family members who in many cases lack the necessary skills for the position they’re assigned to.
The risk averseness syndrome cripples the development and long term endurance of these businesses. Most of them stick to a particular model of business mainly dominated by a paternalistic management structure that instead of focusing on recruiting and grooming the necessary skills for growth and expansion sticks to a family based human resource pool.
The subsistence syndrome where by many founders only see their business as a means of meeting day to day life expenses and achieving a comfortable life for their beneficiaries also causes such businesses to fail. Unfortunately, so many of these businesses outgrow a subsistence need and demand more from the founders. Poor stewardship due to over centralisation of power within the company whereby the founder opts to groom his favourite heir ignoring the rest.
National economic vulnerability due to poor policy planning and corruption for example in Uganda in a situation where a founder dies without a will; his/her estate ends up being managed by the attorney general’s office, most of whom haven’t a single clue on the principles and values of the business.
Geoffrey Munno, firstname.lastname@example.org