On the surface, running a family business is the same as other businesses: there are strategies, partners, suppliers, customers and products.
Yet family businesses have one more element to deal with – the family itself!
This not-so-simple element creates a much bigger deal for the family businesses to handle and how you manage that will make or break the success of the family business.
Here are some of the unique issues that family businesses have to deal with:
- How to entice the next generation to take over the business?
- How to teach them about business in the new world?
- How to embrace the difference in ideas between current and future owners?
- How to position the business so that it continues to grow in spite of the transition?
- How to structure the new shareholding?
- How to enhance the business value?
- How to preserve the family’s wealth?
- How to let go?
Each of these challenges adds much more stress and pressure onto the family business owner, making running this business much more difficult!
But it does not have to be so.
Many family businesses have successfully overcome these and went on to mega successes that other non-family businesses cannot achieve.
A case in point – 52% of SGX listed companies are family-owned, with most of them entering into the 3rd or 4th generation. They have helped create the famous families of Singapore like
- the Kweks of Hong Leong & CDL,
- the Ngs of Far East Holding,
- the Wee family of UOB,
- the Kuok family of Wilmar,
- the Eu family of Eu Yan Sang and
- the Yap family of Qian Hu.
In fact, in Asia, being a family business seems to have more advantages than non-family business because of its ability to sustain and ride business cycles better.
They have a much longer focus than non-family businesses.
This is, of course, provided they can overcome the unique challenges that family businesses face.
For the past 16 years, John has been working in his family business.
Between his brother-in-law, his wife, his wife and himself, they had constant disagreements! If they wanted to purchase a new office, John resisted. When John wanted to buy a new car, they resisted. When John hired new staff, they complained. When they hired new staff, John complained. But when there is no staff, everyone complained! It seemed like there was no end to the bickering!
But things came to a head when the children started to get in on the picture. John’s children are not old enough to come into his business but theirs are.
And suddenly, he had to grapple with succession issues when they haven’t even talked about where the company should be headed!
To cut the long story short, we had to do something to change the way we ran the business, and FAST!
So, we applied what John knew best – to help companies strategize, innovate and grow – and they slowly became a much more focused family business. Here’s what they did…
These days, they are still arguing, but basically for who pays the next makan!
If you run a family business, you will probably understand these issues and more.
Our aim is to help first- and second-generation businesses survive past the third generation in a hands-on and practical manner.
By helping family businesses create a special brand, identifying a unique niche for business development and embrace a business-first mentality, we can help the family business position itself alongside MNCs in terms of business know-how, yet helping them preserve both firm- and family-value. We provide a practical application of business strategy for family business owners to embrace, to identify new business opportunities to ensure continued growth, and deal with the dynamics of family businesses in a practical manner.
If you have always been trying to set the business on the right course, then you might like to check out with us.
Suresh Shah, M.D., Pathfinders Enterprise