Geshy Reddy
Around 78 percent of South African family businesses reported growth in 2016, despite economic challenges and are expected to develop swiftly and in full force moving forward.
What makes family businesses so successful is that everyone is committed to the same cause and has personal stakes in the business. Globally the family owned business with the highest generated revenue is Walmart’s, an American household as most of us may have heard off.
Locally, family owned businesses are a significant contributing factor to our national GDP. Planning ahead and gearing towards a business exit strategy ensures the smooth continuation of the business for owners to pass down to their family members to keep the legacy going as well as ensuring a stable revenue growth.
ALSO READ: What to do if you find yourself accidentally richer?
As families expand, more members need to ‘dip into the pot’, so to speak, so business expansion as well as wealth creation via savings and planning is essential. Without proper forecasting and clever wealth creation, the transition of the business from one generation to the next poses the risk of downsizing or closing the business.
Planners most underutilised skills are business planning, in my opinion. Planning ensures that issues arising from possible divorces will create liquidity so that the business capital remains intact and no one is unfairly compensated.
It also ensures for wealth creation when liquidity is required for a crisis, especially if the key role players become incapacitated or die and ensures the main owner is able to trade the business to his successors yet not necessarily need to rely on them in the event of future potential business closure as there will be sufficient funds for the business to buy him out and for him to live off for the number of years planned for.
Click to receive news links via WhatsApp. Or for the latest news, visit our webpage or follow us on Facebook and Twitter
