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Children who are living their parents business dreams
From left: Nishit Shah (Nishit &Co Ltd), Delia Stirling (Brown's Cheese), Vimal Shah (Bidco Ltd), and Vivian Mwangi (Quality Plus Limited). Photos/File/Diana Ngila
Every morning, 91-year-old Shandulal Shah is brought to his sons’ Interior Design shop in Westlands, Nairobi, where he sits at a corner watching the goings-on at the store. Though not active, Shah is aware of his surroundings at the store that his son, Nishit ,opened in 1982, after he took over the textile business.
Shandulal’s textile business is the root of his son’s Nishit &Co Ltd, one of the big boys in the interior design business in the country. “He knows what’s happening around him, but is no longer physically active because of his advanced age.
I bring him here to keep him alive,” said Nishit in an interview at his store recently.
“Even at his age, he doesn’t know how to relax. He started working at the age of 13 and selling has been his life. That’s why we bring him here so that he can still feel like he’s part of it all.” Nishit, who wanted to pursue a degree in medicine, instead joined his father’s business at a young age in August 1982.
The furnishings fabric business was then on Biashara Street. He later moved it to a much more spacious stand-alone building in Westlands.
Quality “I started by getting to know my father’s business well, then moved the business to something bigger because to stay relevant we had to offer more than my father did in our small shop on Biashara.
We now do furniture and interiors. And for all this we import high quality fabric from around the world. Whatever you want, we will bring it in for you.” Nishit is among second and third generation offspring who have taken over and successfully expanded their family businesses.
Businesses such as Tiles & Carpet, Bidco, Simba Colt, Auto Xpress, Sarova, Athi River Mining, NIC Bank, Kahama’s and Browns are among the many businesses where the founders handed over the reins to their children who have taken the original business and either expanded, branched out or made them professional companies that are major contributors in their sectors and the economy as a whole. Peter Mutua, a consultant on family businesses, says the smooth transition to the next generation can be a sensitive point because many founders’ identities are tied to their business and their way of doing things. “Rather than struggle for leadership, prudent family business owners mentor, support and encourage their innovative children to start new ventures using their ideas even when these appear to compete with the old business,” he said.
He added that some of the family businesses that have succeeded in the country, and even internationally, have done so due to the parents investing in the next generations’ education and making career choices as they find a way to integrate into the family business. Bidco Oil Refineries, one of the leading manufacturing companies in the region, traces its roots from a garment manufacturing company founded in 1970 in Nyeri by Bhimji Depar Shah.
Today, he is the chairman of Bidco Company, founded on his original business with his son, Vimal, steering its regional growth as the managing director. The garment business shifted to soap manufacturing following the liberalisation of the textiles industry in 1985. In 1991, it moved its operations to Thika, concentrating on manufacturing and marketing edible oils, fats and soap. For Brown’s Cheese founders, David and Sue Brown, succession was not obvious as the couple was not sure if their daughter, who was then working in the US, would take over the company, based in Tigoni three years ago. But in the end, Deila Stirling, 31, and her husband Andrew, took the reins from her retired parents. Today, Deila and her husband have grown the 32-year-old cheese making company from a small business to one of the leading companies in the country having emerged number 30 in the Business Daily’s Top 100 SMEs survey last year. They have been at the forefront of popularising the consumption of cheese in the country with an extensive marketing and brand awareness campaign, including hosting cheese and wine events at the farm in Limuru.
The business has grown from the founding Browns making cheese for their own consumption to being in every supermarket in the country and beyond. In 2009, the family behind Tiles and Carpet Centre decided to diversify their 70-year-old tiles and fitting company on Biashara Street and move to property development. Kishan Bhanderi and his brothers opted to develop a commercial real estate, 14 Riverside Drive, comprising five office blocks, restaurants, retail space and a 100-room hotel. Sometimes it’s not easy for founders to let go of the reigns of their business to the next generation.
For Vivian Mwangi, she had to write a business proposal that highlighted the value she would add to the business her father had founded after expressing an interest to join the firm. Her father, James Gathage, had started Quality Plus, a quality assurance business, over a decade earlier and run it as a one-man show. Vivian saw the need for change and when she came in, she moved full throttle.
However, it was not easy as she was faced with the immediate challenge of repositioning the firm, hiring staff and expanding to grow the family business bigger. Though she runs a small business, hers is an example of the second generation coming in and changing the structure of the business by making it more professional and investing in a people to help drive it. Family businesses constitute the world’s oldest and most dominant form of business organisations, representing a high percentage of the overall businesses and playing a major role in the economic growth and workforce employment.
Such businesses range from small and medium-sized companies to large conglomerates that operate in multiple industries and countries. Some of the well-known international family businesses include Benetton, L’Oreal, Samsung, Siemens, Ford Motors Co., and Wal-Mart. The IFC’s family business handbook says most family businesses have a very short life span beyond their founder’s stage and that some 95 per cent do not survive the third generation of ownership.
The lack of preparations of the subsequent generations to handle the demands of a growing business and a much larger family, are seen as some of the key issues leading to failure or squabbles. A company like Auto Xpress has survived and is now being run by the third generation with Sandeep Shah at the helm.
What Shah’s grandfather started as a petroleum distribution firm in Kisumu in 1959, has grown to become one of the biggest players in its market distributing tyres, wheels, batteries, alignment and balance among other services.
Increased demand for their products as more vehicles are registered in the country has seen the business grow its revenues to over Sh1 billion. Shah says the company is looking to close this year with revenues of Sh5 billion. Last year, the group recorded Sh3.7 billion having passed the medium-sized company threshold of Sh1 billion five years ago. The company branched into the tyre business in 1967 following demands from its customers who were looking for more than just petroleum products.
The turning point for the company came in 1997 when they got the distribution rights for Pirelli tyres in Kenya.
The Italian company gave them the deal on condition that they moved to Nairobi, and they did, opening their first branch on Mombasa Road in 1998.
“We started by renting then buying out small outlets in the city. What people see as a sudden explosion of our centres has taken over 10 years of hard work, attention to details and focus,” said Shah, during the opening of the company’s Dunlop Centre in Industrial Area recently.
They now have several outlets in the city and its environs. His brother is involved in the business but in the background. In 1974, H J Paunrana founded Athi River Mining company (ARM), which mainly involved in agricultural lime, rubber and glass among other areas.
The company is today one of the leading cement manufacturers in the county and is listed on the Nairobi Securities Exchange since 1997. ARM is an example of a family business with clear succession structures that saw the founder’s son and managing director Pradeep Paunrana, who joined the firm in 1984, become its largest shareholder following a distribution of shares among its members. He got an 18 per cent stake, worth Sh3.54 billion in the firm following the split of the family’s investment vehicle – Amanat Investment.
The move in July of this year was part of the distribution of wealth of ARM’s founder among his descendants after he passed on in 2009, with his siblings controlling the investment arm. The Kahama boys have grown their hospitality business from a small hotel to being a major player in the hospitality industry with establishments across the country.
The family business runs Parklands Shade Hotel popularly known as K1 Klub House, Kahama hotels in Nairobi and Mombasa and they recently acquired Small World Country Club in Athi River.
Started by the senior Kahama, the businesses are now run by his sons. About six years ago, Allan Muriungi opened up Sierra Brewery, a sister company of Sierra Restaurant at Yaya.
He is the son of Wilfred Muriungi, the proprietor and chairman of Mastermind Tobacco Ltd. However, not all families have a smooth transition from the founders to subsequent family members, or the next generation.
