It is estimated that family businesses contribute 70% to 80% of the total GDP of many advanced nations. In the United States, family-based businesses that gross less than USD 250,000.00 contribute about 75% of the total GDP of the country.
During my visit to Adelaide in Australia, in 2015, I noticed that many businesses were family-owned, including large farms; some were more than a century old. However, family businesses that have endured are few in Nigeria—they usually die with the death of the original owner. Most family businesses that have endured are mostly owned by Muslims, Asians, and Greek families.
A Jewish man once told a black man that when money enters a Jewish hand, it circulates seven times before going to another race. But as for black people it immediately leaves their hands to another race; hence, we are backward and poor.
The story of how Sir Shina Peters, a musician, built a private residence with 20 Million Naira in 1990 and Jim Ovia opened Zenith Bank with about the same amount that same year has been circulating online for sometime now. If Zenith Bank lasts for a hundred years, it will employ tens of thousands of people, while that house built by the musician will become a monument—one that will drain the resources of the descendants of that musician. Remember, a hundred years is only three generations.
The aim of this post is to encourage African Christians to cultivate the long-term, trans-generational, investment mindset and to kill the mindset of advertorial wealth and pseudo-elitism that has no deep roots or branches. If Nigeria can be in the present economic difficulties, then every so-called rich man must be very careful.
The same oil that the North Atlantic nations and the Arab nations have maximized is what we have squandered, just like Venezuela, from Hugo Chavez to President Nicolás Maduro, such that a nation that is supposed to be in affluence is now in dire financial straits.
A Family Business
A business is whatever takes your time energy, resources, skills, and renders services to people and, as well, pays you dividends amongst other things.
A family business is a business run by a group of people related by blood or marriage. An example is the Trump Family. Dangote’s daughter is currently running the flour mills; in fact, in many cultures, both daughters and sons come into the family business with their spouses. The Rothschild at one time refused to marry outside their household so that the wealth will not go out of the family. That is why in many Middle Eastern nations, cousins marry each other.
In Building A Business
- It is deliberate—it is not a chance occurrence. Sometimes, it can be a cultural or religious tendency and it is premeditatively done out of conviction and understanding of the importance of family businesses.
- It is planned—strategically and systematically started and nurtured—just like the Ibos who have the apprenticeship system in developing businesses.
- The building process is progressive—it involves a stage-by-stage process that is deliberately entered into. The Chinese call it crossing the river by feeling the pebbles.
- It involves projection, protection, preservation, and propagation from generation to generation, just like the vision of Dubai has been passed on from generation to generation.
To endure means to be long-lasting, trans-generational, and resilient.
Many Hotels in Nigeria don’t last longer than 20 years before going into decay. However, I stayed in Stanley Hotel (currently called Sarova Stanley) in Nairobi, Kenya, on my way to Madagascar; it has been there since 1902.
Hoshi Ryokan, an inn in Japan, has been run by a family for up to 1300 years. The Beretta family has been producing guns in Italy for nearly 500 years. The Backdash family has been producing ice cream since 1885 in Damascus. Smithfield Foods was started in 1936 by Joseph W. Luter I, in South Virginia. In 2013, it was bought over by a Chinese firm from the hands of Joseph W. Luter IV; that’s about four generations of rearing pigs. It is the biggest pork producing company in the world running into billions of Dollars. The family business grew and acquired other businesses before it went public and was bought over by the Chinese. Haci Ömer Sabanci (Jan. 1st, 1906 – Feb. 2nd, 1966) founded a number of companies, which later formed the second largest industrial and financial conglomerate in Turkey—the Sabanci Holdings. He initiated the establishment of a dynasty of Turkey’s wealthiest people. The family pays 5% of Turkey’s Annual Tax Returns.
In Nigeria, the Dantata Group was established in 1910; even Dangote is a maternal offshoot from the Dantata family. Other family businesses that have lasted include the Ibru Group that was founded in 1956 and A. G. Leventis Group.
Why Family Businesses?
- They provide national and community development. Harley Davidson, Cadbury, A. G. Leventis, Tata Corporation, Givenchy, and Versace started as family businesses. Companies like Zeigler Feeds, Martinelli Winery, and The Mountain Winery (which was founded by Paul Masson) all started as family businesses and they have contributed immensely to national economic growth and global development. In fact, the Cadbury family built Bournville from where the name Bournvita is gotten.
- Family businesses provide employment for others outside the bloodline. Sam Walton founded the Wal-Mart Stores and became the richest man at one time in America. His six children who inherited the company were collectively richer than 10% of the total American population-that is they are richer than 30 million Americans. They employ about 2.3 million workers worldwide by 2017 estimates with 11,695 stores in 28 countries and generate a revenue of 485.873 Billion Dollars (2017), with a profit of 13.643 Billion Dollars. Their slogan is that they help people round the world to save money and live better.
- Pick n Pay was started by Raymond Ackerman in 1967; he retired in 2010 and his son, Gareth, is the current chairman. They employ 50,000 workers. The chairman, Gareth, said that his father, now 81 years old, still comes to check on them. His father said, “being family controlled has ensured that the values introduced in 1967 have been carried through over 42 years. Importantly, this will not change”.
- Family businesses provide career paths for members of the family from generation to generation. The skills learnt by one generation are transferred to the next with resultant improvements from generation to generation.
- They are relatively more stable than public companies because of close monitoring and supervision of the members of the family.
- Because of the services they render, their popularity and spread, they have social, political, and economic influence like the Rothschild and Trump families.
- Family businesses can be started small and be grown over a long period into conglomerates.
What Family Businesses Endure?
Enduring family businesses could range from:
- Real estates
- Funeral homes
- Engineering and constitutional like Tata Group of companies
The truth is that just about any family business can endure if the right principles are applied.
In the next post, we’ll be looking at sustainability and why many family businesses fail.