This archive report was first published on 21 August 2019.
According to a recent report by Bloomberg, the Walton family's wealth increases by Sh413.6 million every hour. This is a testament to their effective succession planning, which has allowed them to preserve their wealth for generations.
Sam Walton founded Walmart Inc in 1962, and the family has managed to maintain their wealth by passing it down to the next generation. In fact, a recent study found that people born into wealthy families define success as passing their businesses on to the next generation in as good or better shape than when they inherited it.
“Continuity is critical because it supports the legacy of both the family and the business. It also has an impact on employees and community and is an important facet of supporting growth and longevity,” said the 2018 PwC Next Generation Study.
However, many family-owned businesses in Kenya struggle with succession planning. A 2018 PwC Family Business Survey found that only 17 per cent of local family businesses have a robust, formalised and communicated succession plan in place.
“The preparation starts from when you are born. I’ve been going to the office with my grandfather for as long as I can remember,” said one entrepreneur who spoke to PwC.
Unfortunately, the lack of a clear succession plan can lead to the collapse of family-owned businesses after the founder's death. It is essential for the current generation to prepare the next generation to manage the businesses effectively.
