This article provides insight into the effects of the economic issues and how they impact family businesses while offering guidelines to navigate the uncertain future and protect the Family's accumulated wealth.
The general impact of economic challenges on businesses in Nigeria includes:
Unfavourable Foreign Exchange Rates(FX), inflation and interest rate changes.
Considering the unique nature of Family businesses in terms of the intricacies of Family dynamics, more effort needs to be put in place to ensure survival in these feeble economic times and the strategies for family businesses to safeguard family wealth includes:
Nurturing Next-Gen Leaders- To harness the positive attributes of the next-gen leaders, there is a need for proper mentorship programs, internships and nurturing. By investing in their development, Family businesses can ensure a smooth transition of leadership and protection of the business from rash impact of market forces arising from poor business decisions.
Family Philosophy and Diversification of Investments-
One of the major drivers of Family businesses’ investment philosophy is the natural values and culture of the Family, which is usually dictated by the Founder. Families need to expand and diversify their portfolio, whilst ensuring as much as possible, that the Family values are still upheld. Diversifying businesses and investments across various asset classes, industries and jurisdictions is a crucial strategy for Family businesses in navigating Nigeria’s economic landscape.
Risk Management- Comprehensive risk management strategies are imperative for Family businesses facing economic uncertainties. Addressing financial, operational, and strategic risks ensures a positive trajectory for growth. Regular reassessment and updates to risk management plans are crucial components of positioning the Family business for sustained success.
International Wealth Management- For Family businesses with diverse global interests, international tax planning is indispensable. Offshore trusts, foundations, and companies offer asset protection, privacy advantages, operational flexibility, and tax benefits. These structures contribute to enhanced privacy and play a crucial role in succession planning, ensuring a smooth transition of assets while retaining Family control.
In conclusion, Family businesses that diligently monitor economic developments, engage with professional consultants, and continuously refine their strategies will not only safeguard their wealth but also emerge stronger and more adaptable to the evolving economic landscape. The future of Nigeria’s economy remains intertwined with the success of Family businesses. By adopting comprehensive strategies, these valuable enterprises can continue to fuel the nation’s progress and prosperity.