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Securing your family business

  • Written by Clifford T. Sorita
  • Published in Opinion
  • Read: 603

MOST businesses are in fact family businesses, and the mistake of most businessmen who first build successful family businesses is that they all get caught up in the business aspects of the family business, and just end up hoping and praying that the “family dynamics” will take care of itself. If history has taught us anything it’s that this “family dynamics” is in fact what eventually leads to the downfall of even the most successful family companies.
   
The idea that wealth shall not pass three generations though is a well-known one, which is why more and more family business owners turn to family business coaches for advice.
   
In Southeast Asia, few family business coaches are as well known and respected as our very own Professor Enrique “Eric” Soriano III.
   
“In my work as a family business coach in the region, one of the most important factors that affect family business transactions is the lack of a clear, well-defined business succession plan. The lack of such a plan may create a conflict between the potentially inconsistent goals of family unity and the continued financial success of the business,” says Prof. Eric.
   
Many say that the success or failure of a business is a question of character, that children born of wealth lack the drive, diligence, ambition, and fortitude to take the reigns of a flourishing business. Yet many families groom their kids from an early age to be business-minded, but as history has shown us, this has not affected the trend of big family businesses collapsing before or when the third generation takes over. If it is a factor at all, character is only part of the equation.
   
To successfully transition a family business from one generation to the next requires more than good intentions, and the proper mindset. In order for a family business to last more than a single generation, the relationship between the two often conflicting ideas of family and business, need to be reconciled, and as clearly defined as possible.
   
“In my work as a family business coach in the region, one of the most important factors that affect family business transactions is the lack of a clear, well-defined business succession plan. The lack of such a plan may create a conflict between the potentially inconsistent goals of family unity and the continued financial success of the business” (Prof. Eric Soriano).
   
The concept of family is based on ideas, mores, conventions and culture none of which are set down on paper. To even imply that relationships within a family should be defined in writing would be regarded as absurd, in bad taste and even unheard of. For most, the concept of family is sacred, and it should transcend written laws. For the majority, in times of strife, family is the one source of hope, support, strength, and often of the will to carry on. While strife tends to bring families together, wealth has proven to have the exact opposite effect, and the relationship between wealth and the intensity of the family squabble is one of direct proportion. Businesses, however, are a different matter.
   
From the onset, corporations are required to lay down by-laws that dictate the conduct of all who are part of a business. As businesses expand in terms of income, scope, influence and number of employees, rules become even more imperative. Yet, in today’s business world, few family businesses incorporate rules that govern the relationship of the business with the family members who are part of the family that owns it. Herein lies the biggest reason why most family businesses fail before the business can transition to the third generation.
   
It is from the business side of the family business equation that business succession plan should be defined. It is from the business end, that lack of sentiment or emotion is permissible. It is in the business aspect of the equation that legally binding documents can be generated to ensure that when the inevitable crisis does occur a family business can endure, and even continue to prosper beyond the crisis.
   
Professor Enrique Soriano will facilitate one of his bestselling one-day workshop entitled “Securing the future of your family business” on April 30, 2015, Thursday, 9-3:30 p.m. Prof. Eric Soriano will be sharing valuable insights into how businesses can thrive through inevitable crises and transition. The venue will be in Makati at the AIM Conference Center. For more inquiries, please contact the organizer, Octopus Branding c/o John 0947-5070869/0915-9108686/02-5569707. Slots are limited.

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For any personal comments or suggestions, you may likewise call 0917-4805585 or email me at This email address is being protected from spambots. You need JavaScript enabled to view it..

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