by Marlon Abrahams

Family Businesses

Nation in Conversation

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Session two of day three of Nation in Conversation focussed on family businesses in agriculture with anchor Theo Vorster, CEO of Galileo Capital, hosting a panel discussion with Tommie van Zyl, CEO of ZZ2; Pieter Karsten, Deputy MD of Karsten Group; Prof. Elmarie Venter, Director of NMMU’s Unit of Family Businesses; and Danie Minnaar, Chairman of Senwes Ltd.

Danie set the tone for the discussion by stating that about 80 – 90% of small businesses were family owned, adding that many huge brands like Monsanto and John Deere began as family businesses.

Prof Elmarie said it was an undisputed fact that family businesses play a massive role in economies all over the world while Theo mentioned that the concept of family businesses could be traced back to biblical times.

Tommie, whose family business (ZZ2) produces half of the tomatoes in South Africa, said it was important to ensure that the business remains united. “Make sure you have a good succession plan so that the next generation does not have to begin from scratch. Also ensure that everyone in the business shares the same vision and steer clear of greed.”

Pieter added that “You need to accept that you are only in play now, in the present, and you’re actually building for the next generation. Learn your lessons and take advantage of it going forward.”

Elmarie reminded the panel that a family business was still just a business. “It will endure the same challenges of a normal business. You have business and ownership issues, in the family business you have the added family dynamics to contend with as well. You have to be aware of and manage issues like nepotism.”

Danie said the two main challenges of running a family business are communication between family members and succession planning.

Elmarie concurred saying it was vital. “You have to discuss these issues in great detail and it should ideally culminate in a family constitution. This will ensure that everyone would have had an input in the way the business is run.”

She added that the worst way to do succession planning was via a last will and testament.

Another challenge family businesses face is appointing the right person for the right position. “You need to manage the business professionally. Once the business grows to, let’s say, several hundred employees, it cannot be managed in the same way it was when it was just mom and dad running the show. You also have to appoint someone best qualified for a position instead of whoever might be next in-line in the family,” said Elmarie.

Pieter added that “As the second generation I was fortunate to grow up with the business as a 7 year old. I learnt that I had to earn respect and my dad helped by ingraining in me that this was a business and not my personal ATM.”

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