PSOJ tackling family biz succession
To help secure the longevity of family businesses, the Private Sector Organisation of Jamaica (PSOJ) has secured financing of US$700,000 (J$62.3 million) to assist Jamaican-owned small and medium-sized enterprises to improve their competitiveness and viability beyond the first generation.
A study done four years ago by the University of the West Indies shows that many family businesses were not being passed on to the second generation, said Sandra Shirley, paid consultant and project manager of the Family Business programme.
Of the 3,000 family businesses in Jamaica, only 12 per cent were acquired by inheritance while 88 per cent were being run by present owners, the study found.
"This means that the businesses were not being passed on to the next generation," Shirley said.
"What happened to the other 88 per cent? Clearly, they went into demise. They didn't have any succession planning."
The FamBiz project is sponsored chiefly by the Inter-American Development Bank with a grant of US$526,000 (J$46.8 million), with the rest coming from local companies, including Scotiabank Jamaica, Development Bank of Jamaica and Pan Jamaican Investment Trust. Shirley said the project would be rolled out over the next two years in four components. The first, dubbed 'promotion and awareness', begins next week with six seminars planned for Kingston, Portmore, Mandeville, Montego Bay and Ocho Rios over the period May 18-21.
The PSOJ has hired EduNova Cooperative Limited of Nova Scotia, Canada to deliver component 1 of the project, with family business expert Dr Robert Blunden of Dalhousie University and Pernulle Fischer-Bouler at Kisserup International Trade Roots Incorporation to conduct the training sessions.
At the end of the sessions, 30 family businesses will be selected to receive technical assistance - the second component of the project — to strengthen operations and position them for external funding, including potential listing on the JSE Junior Stock Exchange.
To qualify for selection, said Shirley, the firms: ideally have to be registered and in operation for at least two years; have an annual turnover of US$3 million - which at current spot prices is equivalent to J$267 million; have no more than three different families involved in the ownership and or operation of the business, and employ no more than 100 persons.
She said the businesses should have communications capacity for access to electronic mail, telephone and/or fax to maintain contact. The selected participating businesses will be asked to contribute at least J$3,000 per participant.