Intergenerational Lessons: Building Legacy Businesses in an African Context

Across Africa, family businesses have quietly held communities together for decades. From township spaza shops to intercity bus companies, family-owned butcheries, panel beaters, funeral parlours, catering businesses and taxi associations, these enterprises are often the first employers, the first lenders and the first examples of entrepreneurship that children see.

Yet many of these family businesses do not survive beyond the first or second generation. Globally, only about 30% of family businesses make it to the second generation, around 12–15% reach the third, and only 3–5% survive into the fourth generation and beyond. Conway Center for Family Business+1 

In South Africa and Africa more broadly, research suggests that most family businesses do not survive past the second generation, with estimates that up to 86–89% fail by the third generation, representing a major loss of intergenerational wealth and community stability. Stellenbosch Business School+1

At the same time, multigenerational family businesses are powerful engines of growth. In South Africa, multigenerational family-owned firms are estimated to contribute 20–30% of GDP, reflecting their importance to the formal and informal economy. cnbcafrica.com

This tension between potential and vulnerability is where the deepest intergenerational lessons sit.

1. What Successful Multigenerational Family Businesses Have in Common

International and African research points to a consistent pattern among legacy family businesses that survive across generations:

• They plan succession early – not as a last-minute event when the founder is ill or approaching retirement.

• They have some form of governance – a board, advisory council or structured family meetings, often with at least one independent voice. KPMG+1

• They treat strategy and financial management as non-negotiable disciplines, not informal side activities. Stellenbosch Business School

• They invest in the next generation’s education and development, both formally and through exposure to the business from a young age. ssbfnet.com+1

• They protect trust and reputation as strategic assets, knowing that community trust can be lost faster than it was built. PwC+1

A South African framework developed by the University of Stellenbosch Business School summarises these into eight “levers” for multigenerational success: succession planning, leadership, strategy, family harmony, financial management, governance, communication and entrepreneurial orientation. Stellenbosch Business School 

Similarly, a 2024 study on family-owned passenger bus companies in Zimbabwe found that firms that deliberately manage succession, leadership, total family resources, strategic planning and governance are more likely to survive across generations. ssbfnet.com

The message is clear: longevity is not accidental. It is designed and maintained.

2. How Succession and Transition Are Handled in Legacy Organisations

In well-structured multigenerational businesses, succession is treated as a process, not an event.

Common practices include:

• Early exposure – Children or younger relatives work in the business during holidays or on weekends, learning from the ground up.

• Progressive responsibility – The next generation is gradually given responsibility for projects, branches or functions before they are given full control.

• Formal governance – Boards or family councils clarify who leads, who owns and who decides what. High-performing family businesses globally are significantly more likely to have formal boards. KPMG+1

• Family charters or constitutions – Some families create written charters that capture values, rules for succession, ownership structures and dispute-resolution mechanisms, helping to preserve cohesion over centuries. Financial Times

In Africa, surveys of family businesses and NextGen leaders show that younger generations want to contribute to innovation, digital transformation and sustainability, but often feel constrained by traditional leadership structures. PwC+1

Where families create space for structured succession and shared leadership, the business is more likely to benefit from both experience and fresh thinking.

3. The Power of Multigenerational Teams

When they work well, multigenerational teams are a strategic advantage:

• Older generations bring deep community relationships, industry wisdom and an intuitive sense of risk.

• Younger generations bring digital fluency, exposure to global trends, modern management tools and new business models. PwC+1

Studies on African family firms show that when NextGen leaders are empowered to drive innovation, especially around technology and new markets, family businesses become more resilient and better positioned for long-term growth. PwC+1

The lesson for African family enterprises is simple: do not see generational differences as a threat. See them as complementary assets to be consciously integrated.

4. Why So Many African Family Businesses Fail to Transition

Despite their importance, many African family-owned businesses never grow beyond the first generation. Typical examples include spaza shops, mechanics, taxi businesses, butcheries, funeral parlours and catering enterprises that close when the founder steps back.

Common reasons include:

4.1. Lack of formal succession planning

Many founders delay conversations about “who will take over” until it is too late. This leads to conflict, confusion or forced sales. Research across Africa and globally highlights weak or absent succession planning as one of the top reasons for family business failure. Stellenbosch Business School+2blog.exit-planning-institute.org+2

4.2. Informality and poor financial management

Many township or small family enterprises operate largely in cash with limited records, management accounting or strategic planning. Studies from South Africa indicate that the average lifespan of a family business is about 24 years, often matching the period the founder remains in control. One major reason for failure is “the use of fewer management accounting instruments” and limited financial visibility. Stellenbosch Business School

4.3. Founder-centric culture

Businesses are often built around the founder’s personality, relationships and work ethic, not around systems. When the founder is no longer active, the business struggles to function or retain customers.

4.4. Family conflict and unclear roles

Without clear structures, roles and expectations, unresolved family tensions easily spill into the business. This can create resentment, power struggles and mistrust that push the next generation away. Stellenbosch Business School+1

4.5. Limited investment in the next generation

Some African family businesses focus primarily on survival and immediate income, with limited investment in training successors or exposing them to strategic decision-making. A 2024 reflection on African family firms notes that lack of deliberate education and development of successors is a recurring risk. ssbfnet.com+1

5. Why Children of First-Generation Entrepreneurs Choose Corporate

It is common to see the children of first-generation spaza owners, taxi operators, mechanics or caterers choose corporate careers instead of the family business.

Several themes arise repeatedly:

• Visibility of struggle – Many children watched their parents work long hours in hard conditions with irregular income. Corporate jobs can feel safer, more predictable and less emotionally loaded.

• Social mobility and status – Corporate roles often carry social prestige, formal titles and clear career paths that informal businesses may not appear to offer.

• Different interests and qualifications – A child who studied IT, finance or law might not see a clear path to align their skills with a small family workshop or corner shop.

• Unresolved family dynamics – If the business is associated with conflict, stress or trauma, the next generation may distance themselves from it for emotional self-protection.

• Lack of invitation – In many cases, nobody explicitly invites the next generation into the business with a clear role, development plan or shareholding path. Without that, corporate opportunities become the default.

These choices are understandable, but they often result in the quiet disappearance of potentially powerful legacy assets.

6. Revisiting the Story: A New Path for African Family Businesses

The situation is not irreversible. Many African family businesses can still re-imagine their legacy in ways that honour both the founders’ sacrifices and the next generation’s aspirations.

Here are some practical approaches:

6.1. Start with honest intergenerational conversations

Create safe spaces for founders, siblings and children to talk about:

• Whether the business should continue

• Under what model or structure

• Who is interested in which role

• What support the next generation would need to say “yes”

These conversations are often easier if facilitated by a neutral advisor, mentor or trusted professional.

6.2. Map the full family asset base

Look beyond cash. Consider:

• Premises or strategic locations

• Licences and permits

• Long-standing supplier and customer relationships

• Community reputation and trust

• Vehicles, equipment or routes (in the case of taxis, buses or logistics)

Many so-called “small” businesses are sitting on undervalued strategic assets that could form the foundation of a scaled operation if restructured well.

6.3. Formalise governance and financial management

Even a modest family business can benefit from:

• Regular financial statements

• Simple budgets and cash-flow forecasts

• A basic advisory board or “kitchen cabinet” that meets quarterly

• A family council where business and family matters are separated but aligned

Research from South Africa and Zimbabwe consistently shows that better governance, clearer strategy and stronger financial management significantly improve intergenerational survival. Stellenbosch Business School+1

6.4. Invite corporate-experienced children back in new ways

Children who have gone into corporate can return as:

• Non-executive advisors or directors

• Co-founders of a “version 2.0” of the family business

• Leads for new business units such as e-commerce, digital marketing or financial controls

They do not need to “take over the shop” in its current form. They can help modernise it, formalise it and position it for larger contracts, franchising or partnerships.

6.5. Blend tradition with innovation

Spaza shops can become branded convenience outlets. Taxi businesses can explore digital booking, safety features and route optimisation. Funeral parlours can add grief support, financial education and digital customer service. The next generation’s education, networks and technology skills can be used to transform trusted community brands into competitive industry players.

6.6. Document values and rules

Even if a full family constitution feels too formal, simply writing down:

• Family values

• Expectations around work ethic and integrity

• Principles for appointing family members

• Ground rules for ownership and profit-sharing

can reduce conflict and give everyone a shared reference point. Stellenbosch Business School+1

7. Legacy as a Shared Project

African family businesses carry more than balance sheets. They carry stories of migration, survival, sacrifice and aspiration. When a first-generation spaza, taxi operation or small workshop closes without a succession plan, it is not only an economic loss. It is the loss of a story that could have become a legacy.

Intergenerational success requires both sides to stretch:

• Founders willing to let go of full control, formalise what they built and welcome new thinking.

• NextGen willing to see the hidden value in “small” family businesses and bring their professional skills home in creative ways.

With deliberate planning, honest dialogue and the right support, African family businesses can evolve from survival enterprises into enduring legacy organisations that serve communities for generations.