The Only Glue That Can Hold The Family Business Together

The Only Glue That Can Hold The Family Business Together

IN MY years of coaching Southeast Asian family businesses, I have always held the belief that a shared value system is often the only glue strong enough to hold the family business together. Family’s guiding beliefs as family Values inspire people to do things that are sometimes difficult, to make commitments that require discipline and to stick to plans for the long haul. An enduring commitment to values is the greatest strength and competitive advantage family ownership can bring to any company. We refer to these values that the family shares and practices in individual behaviors, at work, in relations among family members, in relation to the outside world, and with regard to family wealth. Every time I facilitate the formulation of family agreements (Constitution), I would normally start by requesting family members from all generations to present and share their family core values and beliefs. They are then requested to explicitly acknowledge the shared values and beliefs behind the principles and/or policies they have developed. Such values and beliefs may refer to both present and future. They state what matters to the family, its culture, its mission, and what the family wants to become — its vision for future generations. Some of the examples of powerful values that I usually encounter are Respect, Hard Work, Integrity, Stewardship, Humility and Love of God, among others. In order to achieve business goals, strategies have to be put in place. However, among the many strategies that may be developed, how does a family business choose which suit the purpose? It lies on the core beliefs, values and ownership-leadership vision of the...
Do We Really Need A Family Constitution?

Do We Really Need A Family Constitution?

The following is the confession by a worried 62-year-old business owner: “Three of my children have proven themselves to be competent and reliable. I know they are hardworking and I believe they are capable of leading the family business into the future. They have been egging me to look in into the possibility of hiring non-family members to occupy middle management positions in the family business. Perhaps, it’s about time as the business has become so complex. Honestly, I didn’t expect this family business to grow this big.” “Separately, through the help of a consultant/friend, we are also in the process of discussing the transfer of some control from me to the three of them. This will give me more time to look at opportunities in Vietnam and Indonesia due to the ASEAN Integration.” “Apart from empowering my children, we are also talking about an ownership plan where we start the gradual transfer of ownership to my children. That way, we resolve many ownership issues when I am gone and more importantly in the interim, work out a very good tax minimization plan. Personally, I should have done this much earlier (before the marriage of my daughter) but after a few meetings with the consultant, he assured me there is still time. We both agreed that it is better to start the process.” “So why am I still worried? What makes me awake on some nights? It is really about my other son. He is not involved in the family business and decided years ago that he wanted to pursue his own career. He is an IT engineer working in the US. I cannot stop...
Identifying, Developing Family Talent: Key To Long-Term Growth

Identifying, Developing Family Talent: Key To Long-Term Growth

“Investing in your family business’ human and intellectual capital is probably your biggest investment that will far outweigh all investments in your lifetime.” Most families whose cultural views are based on modern interpretation believe that wealth preservation means successful management of their individual financial wealth. In part, they are correct. But that emphasis leaves out the growth of their family’s human and intellectual capital. They forget that what is critical to success are the individual and collective acts of family members and not what they own. Families who want to stay in business for another generation must encourage entrepreneurship in and out of their companies. You need good family owners to support your company and good family board members to guide the company. You also need one or more members per generation who are wealth creators—who know how to make winning bets that produce the financial returns you need. First, successful families see important changes in their industry and adapt by diversifying into new activities that can grow. Simply put, successful families are entrepreneurial. Second, families succeed because they invest in productive activities (including the development of the next generation), emphasize growing assets, and consume relatively little of their wealth. These families maintain a culture that encourages family members to create things of lasting value. It’s not surprising that these families encourage entrepreneurs. One of the best family wealth creators is Alexandre Birman who showed an interest in business between the ages of 8-14 and was strongly supported by his dad in the early years. He is the second-generation successor of Arezzo, a Brazilian luxury women’s shoes and accessories company; founder of...

ENSURING THE FAMILY BUSINESS LEGACY

To register or to reserve slots just fill out our Registration Form and email us at info@octopusbranding.net Date: July 30, 2016 Time: 10:00 AM to 4:00 PM Venue: Diversion 21 Hotel, Benigno Aquino Ave., Mandurriao, Iloilo City Seminar Details: “ Ensuring The Family Business Legacy, a “ W+B” Family Business Series,  we are inviting you to join us on July 30, 2016/Sat. from 10am-4pm at Diversion 21, Diversion Road, Mandurriao, Iloilo City.  The seminar goes with the launching of his book that has the same title “Ensuring the Family Business Legacy.”   Early this year, he was invited by Harvard University to launch his book and lecture on Aslan governance and succession. The first Philippine seminar was held at the Holiday Inn & Suite inAyala Center, Makati City last Apr. 29 ’16. It was very successful and generated inquiries from outside Metro Manila, thus we had our second leg in Cebu City last June 14 ’16 and now our 3rd leg will be in Iloilo City by the end of July 2016. Succession is one of the realities of business. It is always a challenge to choose the next in line. Transmittal of knowledge is the most crucial because this will be a key to the sustainability of the business. Prof. Soriano will share his insights to the participants on how to pass the torch from one generation to the next. The seminar aims to prepare family business owners on how to ascertain the continuity of their businesses with great success. To reserve slots please call the seminar organizer, Octopus Branding c/o Cherryl or Jeric at : (02)556-9707/0915-9108686/0915-1813057 or email info@octopusbranding.net.  Seminar Investment at Php 3,950.00 per person which include seminar hand-outs, buffet lunch and...
The Risk Of Not Creating A Family Business Wealth Plan

The Risk Of Not Creating A Family Business Wealth Plan

By: Prof. Enrique Soriano “In a family business, it’s the third generation that presents the big problems. The first generation founds the company and has the drive and the dedication to move it forward. The second generation rides that wave. The third generation wants to do their own thing. They’ve seen Broadway; they’ve had all the advantages.” Gale Petronis. There are many proverbs to describe the challenges faced by family businesses in building wealth and leaving a lasting legacy. The Chinese say “wealth never survives three generations,” while the Italians say “from the stables to the stars and back to the stables.” The languages may vary, but the sentiment is the same. It’s been the same all over the world and through the ages: entrepreneurs start from nothing and build a business; their children maintain the business – and a wealthy lifestyle; their grandchildren grow up in affluence and lack the inclination to work and be responsible – and end up losing the business and the wealth. Statistics show that today’s family businesses have a mean age of more than 60 years and are nearing their third generation of family leadership. That makes the concept of family businesses faltering after the second generation less relevant. As a matter of fact, in two previous articles we have discussed some businesses shattering old-school ideals such as that of Kongo Gumi, Japanese temple builder which lasted for 14 centuries (1,400 years) and succumbed only to closure due to unfavorable business climate in 2006. Then there’s the Mellerio dits Meller, a French jewellery house founded in 1613 and still active today. “Each generation imagines itself...