As in South Africa Small and Medium Enterprises (SME) As the sector continues to grapple with economic pressures, one often overlooked risk looms large: succession planning.
Despite the average lifespan of businesses being only around 15 years, effectively one generation, many founders postpone formal succession strategies, putting at risk the future of their companies and the communities they serve.
Sudir Sahdev, regional investment manager at Business Partners Limited, emphasizes that succession planning involves more than just naming a successor.
“Ensuring long-term sustainability, jobs security, supplier networks and community impact requires structured governance, strong financial and ownership planning and intentional leadership development,” he said.
Without such proactive measures, businesses may face leadership voids, internal conflicts, operational instability, or even collapse when a key leader moves away.
protection from the unknown
With a large number of SMEs failing to outlive their founders, Sahdev highlights the significant financial and governance risks associated with inadequate succession planning.
Its impact extends beyond the boardroom, reaching employees who depend on company stability for their livelihoods, suppliers who rely on stable contracts, and local communities who benefit from the business's survival.
“Well-structured changes unlock growth,” explains Sahdev.
“When ownership transition is thoughtfully planned, it empowers the next generation to innovate while reassuring lenders and investors about the stability of the business.” In today's financial landscape where investors want assurance, a clear succession plan can make all the difference.
a successful change in action
A notable case study demonstrating the power of succession planning is Human Scale Printers (HSP), a Durban-based printing and packaging business founded in 1986 by Geoffrey Bongani Buthelezi. Amidst the economic and social turmoil, Geoffrey prioritized planning for the future leadership of the HSP, involving his daughters, Sibusisiwe and Sithokozile, long before his retirement.
Under Sibusisiwe's leadership, HSP has seen amazing progress, including ISO recognition and expansion into packaging.
“When my father first mentioned succession in 2010, it allowed me to incorporate that change into my career plans,” she thinks. Having worked as an auditor, Sibusisiwe had a strong understanding of the operational demands of the business, a background that enabled a smooth transition.
His journey is a testament to the significant benefits of thoughtful succession planning. With innovations like new ISO systems and state-of-the-art packaging equipment, HSP is growing while honoring its community-driven roots.
“Our goal is to build a training facility for young technicians,” Sibusisiwe shares, highlighting their commitment to fostering future talent.
Financial assistance as a cornerstone
Finances are often important during these changes. For HSPs, access to funding during the leadership transition facilitated the necessary investment in new equipment. “Succession can impose considerable financial pressure,” admits Sahdev, “especially when it involves purchases or investments in modern technology.” Business Partners Ltd plays a vital role in ensuring that these changes strengthen the strengths of a business rather than compromise it.
Ultimately, effective succession planning is about maintaining flexibility. Sahdev said, “Every accomplished entrepreneur wants to leave behind more than a business; they want to establish a legacy that will endure long after they leave behind.”
As South African SMEs continue to navigate uncertain circumstances, it has become increasingly important for founders to understand that proactive succession planning is not just an option – it is a necessity.
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