Family businesses refer to firms in which two or more members within the business’ management team are drawn from the owning family. It is a prevalent business phenomenon worldwide and Rwanda is no exception. It is estimated that 45 per cent of publicly listed international firms are family owned. Wal-Mart (United States), Samsung Group (Korea) and Tata Group (India) are just some examples.At times these businesses can have owners or managers who are not family members. However, family members are often involved in the operations of their business in some capacity and, in smaller companies, usually one or more family members are the senior officers and managers.The premise behind the existence of family business is that family members are more likely to have best interests and significant commitments toward the business’ overall well-being. Family participation can strengthen the company because family members are often loyal and dedicated to the enterprise.But it also presents unique problems because the dynamics of the family and the business systems are often not in balance. Interests of a family member may not be aligned with the interest of the business; (a family member may want to be in leadership position whereas yet they are not as competent as a non-family member). Often, the interest of the family members, themselves may not be aligned.One family member who is an owner may want to sell the business to maximise their return, but a family member who is an owner and also a manager may want to keep the company because it represents their career and they want their children to have the opportunity to work in the company.Balancing competing interests often becomes difficult in family business. Most of the time the business is founded by one person (mostly the patriarch or the matriarch). As it expands (and the children grow, the founder wants to change the nature of involvement of family members in the business). Usually this transition begins by involving others to manage the business. This is where problems arise. This transition should be more conscious and formal in balancing personal interests with the interests of the business because they can no longer do this alignment automatically. Most business owners ignore this fact; often at their own peril!There are also challenges when more than one family member owns the business and not a single person has the power and support of the other owners to determine collective interests. Sometimes they are multiple owners and some or all of the owners are not in management. In such situations, there is a higher chance that the interests of the family members not employed in the family business may be different from the interests of those who are employed in the business. There is a greater need for the owners to have a system in place that differences can be identified and balanced.Two main factors to consider in the development of family business and succession process: the size of the family, in relative terms the volume of business, and suitability to lead the organisation, in terms of managerial and technical ability and commitment.Successfully balancing the differing interests of family members and/or the interests of one or more family members on the one hand and the interests of the business on the other hand require the people involved to have the competencies, character and commitment to run the business.Family-owned companies present special challenges to those who run them. They develop unique cultures and procedures as they grow and mature. They should, thus, be managed by people who are steeped in the traditions, or at least able to adapt to them. Some of the skill sets that might be needed include communication, conflict resolution, family systems, finance, legal, accounting, insurance, investing, leadership development, management development, and strategic planning.Ownership in a family business will also show maturity of the business. If all the shares rest with one individual, a family business is still in its infant stage, even if the revenue is strong.The point is; you just don’t bring in someone into the business because they are family, they must be ready in both attitude and aptitude.
