Business Planning Practices in Family and Nonfamily-owned Businesses 2

8/3/2019 Business Planning Practices in Family and Nonfamily-owned Businesses 2

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practices in family and

nonfamily-owned

businesses in the CapePeninsula, South Africa

Eslyn Isaacs

Family Business Workshop

School of Public Health

University of the Western Cape

25 November 2011


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Introduction

Research question

Results

Discussion

Summary and Conclusion

Structure of thePresentation


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Total # of SMEs = +- 2.5 million

Growing at a rate of 150 000 per annum;

Contribution to GDP > 36%;

Contribution to employment > 54%;

50-70% of SMEs in SA are family-0wned.

Limited research in SA on Family Business.

Focus on Succession planning.

Introduction


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Are business planning practices different in family-and nonfamily-owned businesses.

Quantitative research project:

214 SMEs: 110 FBs + 104 NFBs

Cape Peninsula

Research question


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Number of businesses:

110 family-owned

104 nonfamily-owned.

Average age: 12.94 family-owned

12.78 nonfamily-owned

Employment:

2009: 11.70 - family-owned; 10.26 nonfamily-owned

2010: 12.00 - family-owned; 10.56 nonfamily-owned

Sales

2009: R4.7m - family-owned; R3.6m nonfamily-

owned 2010: R5.3m - family-owned; R3.5m nonfamily-

Results: Profiling thebusinesses


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Average age: 40 50 years in both clusters;

Average number years employed prior tostarting the business:

14.86 family-owned 14.40 nonfamily-owned

Entrepreneurs: 58 vs 47 FB and NFBs;

Business owners: 52 vs 57 FB and NFBs;

Highest qualification: Gravitate aroundGrade 12

Involvement in networking: very smallpercentage.

Influenced to start the business: family and

friends.

Profiling owners


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Planning practices planningsophistication


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Planning practices planningresponsibility


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Planning practices purposewith the plan


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Low and moderate level planning finance

comes from family members; High level planning financing comes from

Commercial banks.

Financing not provided: Insufficient collateral;

Poor credit rating.

Planning and financing


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Planning after start-up


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High level of satisfaction with sales growth:

Low level planning:

45% (31) vs. 41% (22): FB/NFB

Moderate level planning:

50% (20) vs. 46% (13)

High level planning: 66% (59) vs. 51% (69)

Planning and Performance(sales growth)


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64 of the FBs employ extended family members:

28 = 1

32 = 2

3 = 3 1 = 4

NB: employ family members more committed.

1 of the NFBs employ members from the extendedfamily:

1 = 1

Family and extended familyemployment (Nepotism???)


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73% of FBs vs 24% in NFBs

16% - sons 5% - daughters (primarily mothers being

the owners)

8% - other members, i.e. brothers, etc.

100% of NFBs will sell when reachingretirement age.

Succession planning


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In family and nonfamily-owned businesses

planning is done; Owners are primarily responsible for

preparing business plans;

Business plans are primarily used to obtainfinance;

A small percentage of owners continue withplanning after the first goal was achieved;

Continued planning does contribute tosatisfaction with sales growth.

Conclusion


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Questions and answers

Thank you for yourattention

Documents

Business Planning Practices in Family and Nonfamily-owned Businesses 2