resistance from uncooperative board.
Entrepreneur Nabeel Hashmi said that he had started his manufacturing plant as auto parts supplier but over years had diversified in packaging, manufacturing of computerised precision dies and molds, liquefied petroleum gas import and distribution, auto parts and packaging material exports.
“Mian Mansha started as spinner and is now in entire textile value chain,” said Hashmi. “He diversified into bank, power production, dairy, hotel business and banking.”
Similarly, Sapphire started with textiles and is now in power and dairy as well. Atlas started with business machines and has expanded into car making, motorcycles and power production. These diversifications have shielded these families from many sector related recession.
Hashmi said by diversifying, these families acted like stock market traders, taking advantage of access to talent and capital as well as allocating family assets across different industries. “This is an appropriate strategy for preserving wealth over the long term,” he added. The only risk in the family enterprise is succession when the founder owner dies.
Creditable research conducted over years has revealed that fewer than 30 percent of family- and founder-owned businesses around the world survive to the third generation as family-owned businesses. Since many first generation owners are still operative in Pakistan, one wonders how the successors act after his demise. History suggests that they would not survive like their peers in developed economies.
M I Khurram, who created a successful family empire in diversified sectors, said, “We are trying our best to engage in a careful succession planning.”
The generation at the twilight of their career is aware of challenges like family feuds, said Khurram. As family businesses expand from their entrepreneurial beginnings they face unique performance and governance challenges.
The trick is to prepare the next generation for taking over the command smoothly by working under the founder owner for several years.
Issues of competence or lack of entrepreneurship do arise and which must be addressed in the life of the founder.
Family business must meet two intertwined challenges: achieving strong business performance and keeping the family committed to and capable of carrying on as the owner, said Khurram. He added that some founder owners give reigns of their diversified investments to separate family members for independent operation.