As the lifespan of South African SMEs dwindles, the need for robust succession planning grows ever more critical. Discover how proactive measures can secure the future of businesses, protect livelihoods, and foster growth in a challenging economic landscape.
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As South Africa’s small and medium enterprises (SME) sector grapples with sustained economic pressure, an often-overlooked risk looms large: succession planning.
Despite the average lifespan of businesses lingering around a mere 15 years, effectively one generation, many founders postpone formal succession strategies, risking their companies' futures and the very communities they serve.
Sudir Sahadeo, Regional Investment Manager at Business Partners Limited, emphasises that succession planning encompasses much more than simply naming a successor.
“It requires structured governance, sound financial and ownership planning, and deliberate leadership development to ensure long-term sustainability, protecting jobs, supplier networks, and community impact,” he states.
Without such proactive measures, businesses can face leadership vacuums, internal conflict, operational instability, or even collapse when a key leader steps away.
With a staggering number of SMEs failing to outlive their founders, Sahadeo highlights the critical financial and governance risks associated with inadequate succession planning.
The impact extends beyond the boardroom, reaching employees who depend on the company's stability for their livelihoods, suppliers who rely on steady contracts, and local communities that benefit from the business’s existence.
“Well-structured transitions unlock growth,” Sahadeo explains.
“When ownership transitions are planned thoughtfully, it empowers the next generation to innovate while reassuring lenders and investors about the business’s sustainability.” In today’s financial landscape where investors seek assurance, a clear succession plan can make all the difference.
A remarkable case study illustrating the power of succession planning is Human Scale Printers (HSP), a Durban-based printing and packaging business founded in 1986 by Geoffrey Bongani Buthelezi. Amid economic and social upheavals, Geoffrey prioritised planning for the future leadership of HSP, engaging his daughters, Sibusisiwe and Sithokozile, long before his retirement.
Under Sibusisiwe’s stewardship, HSP has seen stunning advancements, including ISO accreditation and an expansion into packaging.
“When my father first mentioned succession in 2010, it allowed me to weave that transition into my career plans,” she reflects. Having worked as an auditor, Sibusisiwe possessed a strong understanding of the operational demands of the business, a background that enabled a smooth transition.
Her journey is a testament to the significant advantages of thoughtful succession planning. With innovations such as new ISO systems and state-of-the-art packaging equipment, HSP continues to thrive while honouring its community-driven roots.
“We aim to build a training facility for young technicians,” Sibusisiwe shares, illustrating her commitment to fostering future talent.
Finance is often pivotal during these transitions. For HSP, access to funding facilitated necessary investments in new equipment during the leadership change. “Succession can impose considerable financial pressures,” Sahadeo acknowledges, “especially when it involves buy-outs or investments in modern technology.” Business Partners Limited plays a crucial role in ensuring that these transitions reinforce rather than compromise a business's strength.
Ultimately, effective succession planning is about preserving resilience. “Every accomplished entrepreneur aspires to leave more than just a business behind; they wish to establish a legacy that endures long after they’ve stepped back,” Sahadeo added.
As South Africa’s SMEs navigate uncertain waters, it becomes increasingly vital for founders to recognise that proactive succession planning is not just an option—it is a necessity.
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