My personal advice to business owners (Part 2)

LOS ANGELES – After a series of meetings that took me to Osaka, Dubai and Madrid covering a brief 10 days, I am almost done with work here with the successful launching of Organique Acai, a world-class health supplement manufactured in California and proudly owned by the well-loved Cebuano couple Elton and Cathy Salimbangon.

Their story of faith and courage in the face of adversity makes every Fil-Am here beam with pride! TV and print organizations flew from Manila to cover all the events and I am deeply honored that I was invited to share the expansion plans of the group.

I salute Elton and Cathy, as they have intimated to me early this year their desire to pursue governance while the three children, Luisa, Martina and Nathan, are still in school.

Right after my US engagement, with or without jet lag, I will fly to Cebu on Nov. 26 for my talk on family and board governance at the Cebu Parklane International Hotel. I look forward to exchanging notes with family members and participants.

The three-generation curse

Most companies in the Philippines are family-owned. They compose close to 80 percent of businesses in the country. Unfortunately, 70 percent of first-generation businesses fail to reach the second generation due to sibling rivalries, fights over ownership control and personality conflicts that can tear families apart.

Another reason is that the goals and objectives of the founding generation are rarely the same as of those of the succeeding generation. Indeed, succession problems are the greatest threats to the survival of family businesses.

The Jollibee formula

What made Asia’s biggest quick service restaurant (QSR) food chain Jollibee Foods Corp. hugely successful? The founder, Tony Tan Caktiong, provided the vision and leadership, hired the best professionals, formulated five to 10-year game plans and empowered them to deliver results.

To make sure governance is sustained, each active family member is aware of the programs rolled out. By 2020, Jollibee is poised to gain significant entry to the untapped European Union. With the success of Jollibee in Vietnam, where 95 percent of their patrons are Vietnamese, the group will seek to replicate this success by tapping EU’s mainstream market

I will now continue with the time-tested tips successful senior business owners employ to ensure the enterprise’ growth and sustainability:

2. Never stop communicating with family members.

Talking is the most obvious prescription and the most relevant. When family members stop talking, they stop solving. In a family business, issues never stop. Family members must establish clear and regular methods of communication. The key is to keep on talking and develop a system dedicated in having these important conversations one on a regular basis. In my coaching work, I encourage and often times impose that family members come together at least every month to talk.

These gatherings can cover family issues or business issues. The key is for the lines to be open for every adult member of the family, whether involved in the business or not.

A simple governance model that works

In my recent trip to Japan for my regular coaching work on a ninth generation family, part of the governance rules that every family member must abide by would be regular monthly meetings for active family members and twice a year social-cum-business meetings for non-active family members.

Every two years, those above 50 years old must meet and every three years, every family member must gather for socials and business strategy. This rule applies to all active and non-active family members.

For a 200-year-old family business with more than 100 family members, with a third actively working in the business, it has been a fairly organized and canorous chorus of family members focused on a singular objective of growing the business.

3. Formulate a five-year business plan.

Effecting real change in a family business takes longer. Change, especially related to strategic initiatives in a family business environment, is very sensitive, especially when it involves two or three generations and several branches of the family. By default, families don’t like to recognize the need to change and so they delay the recognition and pressures build up.

The key to effect change is by initiating a process that preserves the dignity of family members and allows them to feel well-regarded throughout this change process.

4. Prepare family agreements.

It is hard to create agreements within the family because things change. And the fact that siblings are good partners now means that they should respect each other enough to have good shareholder agreements or buy-sell agreements. Getting family members to sit down and craft agreements that can be guide posts when it is needed and doing it in advance before they need it is your most valuable gift to the next generation.

To be continued.

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