When we start a business, we always hope that it will last a long time so that the next generations may be able to continue with the business – thus, leaving a legacy.
Let me tell you a story of a man who was married to a teacher and had two sons. He took up Agriculture in College. He started out with his small business of delivering different produce to provinces. Time came when he realize that he was too tired of travelling that he thought of starting a new business with the help of his wife. They have put up a lending business. They start with a small capital. But as years pass, their clients increased and so their business grew bigger. He was happy to realize that he did make the right choice of putting up that kind of business.
It was not easy at the start considering that both of them were graduates of a course far from the kind of business they have. He and his wife attended seminars in order to provide better service. They offer loan programs similar as those provided by financial institutions like pension loans, salary loans and business loans just to name a few. Twenty five years and 19 branches later, they are considered as one of the top Credit Corporations in the country.
He died in 1996. Now the business is being run by one of his sons, his legacy continues. The success of this business is brought about by patience, perseverance and dedication which his children saw while they were growing up. Their employees remained loyal because they were happy with the kind of treatment that the couple showed them all these years. With those positive traits, even the grandchildren will be able to continue the family business.
I shared this story because it perfectly describes how a family business should be nurtured. No business can last long if the owners are not as dedicated as they should be. You should take care of the business because it is your family’s life that is at stake. Not all people are lucky to have enough funds to start with a new business. Once you have started one, value the time, money and effort that you have invested in it.
To thrive in any kind of business is to insist on continuous training and enhancement of skills. A business should meet the demands of the changing world. Part of any family business is the possibility of having conflicts as some may have interests on a certain position or there might be some question with regards on how the finances are handled. So many things can cause strain within the family. The best way to avoid these circumstances is, from the very start, everything should be clear on who does what and there should always be communication among them. Their attitude towards others may reflect the whole company’s image which may be the cause of the business’ sudden fall.
It has been reported that only about 30% of family businesses are able to pass it on to the second generation; 12% on to the third generation and only 3% on to the fourth generation.
According to FORBES, “…. it’s not enough to just put someone, or a group of people, in charge…..the families that handle transitions well recognize that succession is a lifelong process and they often start thinking about the next generation early on.”
The family should start thinking about succession early on. When a business is passed on to the next generation at a young age, they are able to be properly guided and are given a clear set of mind on how to properly run the business. If a young family member has been exposed to the business at early age, he is able to develop the skills necessary in running the business. And later on when the hat has been passed to him, he may be able to identify which ones will still work at the present time and if not, he can come up with better ideas to make improvements. A strong corporate governance, policies and rules should be implemented that should hold strongly hold the company despite passing from one generation to the next. Steve Parnish, a business expert said,” “making a family business a family legacy takes planning and preparation.”
Some family-owned businesses have created a constitution stating clearly what the next generation’s role in the business as well as a vivid explanation about all the assets and how it should be divided among the heirs.
Gaining experience outside the family business may be helpful as well. This allows the company an opportunity to try other things that has been proven to be effective in other companies. Not necessarily trying to exactly replicate but the principles behind it may be of importance.
You may be focused on how the company should move forward. Apart from thinking of how to implement your new plans, consider the people that works for you as well. No business can ever last long if the people are neglected. The employees are the asset of any company. If they do not feel that they are being valued, they will leave and find for another company who can recognize their efforts.
Taking care of a family business entails a lot of hardships which conflicts among family members makes it worse. But the key to being successful in preserving the legacy of the family business is to build a strong foundation of love, trust and unity among the family members.
Join the upcoming 15th Franchise and Business Show starting 14th to16th October at the World Trade Center Pasay City. There will be a Business Journey where people wanting to start a business will get to rub elbows with Entrepreneur Mentors. For more information visit and register www.affi.com.ph. Experience the many Micro Small and Medium Entrepreneurs gathered. It will be worth the visit.