The unique dynamics that make up a family business can be daunting for the younger generation preparing itself to take the helm. Fresh ideas, creativity and the urge to “get things done” often jar significantly with the established operational model that has seen the business flourish to date.
This is not lost on Amelia Renkert-Thomas, joint-Managing Director at Withers Consulting Group, who regularly draws upon the values of entrepreneurialism to help the family business leaders of the future cut through the old idea of succession planning, and make it appropriate to the relative life-stages of all concerned.
Chief among them is the idea that it is indeed possible to break the three-generational cycle of generating and losing wealth, by switching your attention to principles of capital in all its forms. And it is here that the next generation have most to gain in playing an exciting and productive part in the company’s future.
“We have bought heavily into the notion that businesses and wealth are all about money,” says Amelia. “There’s an understanding that preserving capital is critical, but there is more at stake than money.”
Financial capital, she explains, can be easily defined as money and fixed assets, but human capital – that rich source of talent, drive and determination among the family roles and relationships – plays a vast role in making the business what it is.
Enterprise capital, says, Amelia, is what you get when the former two combine to solve a problem. That is the holy grail that keeps the company forward-thinking, innovative and long-lasting but not without responsibility.
“Owners and family members are not just required to be good stewards of the business; but to think too about what capital outside the business can be used to its best and highest value.
“Think how can you take what’s there, and do more with it – and make it better. That to my mind is the centrepiece of entrepreneurship.”
Amelia’s colleague, fellow Joint MD Ken McCracken acknowledges the unique position of the next generation in exploring their own entrepreneurial ambitions within the context of a successful family enterprise.
“A family can provide financial support and be more patient with that support. They can even be more forgiving if that entrepreneurial adventure does not succeed,” he says.
“However, those very advantages can become disadvantages and there could be terrible relationship breakdowns if the enterprise fails.”
But the risks should not prevent the next generation from exploring the possibilities both within and without the family enterprise Ken adds.
“I think the next generation can take responsibility for fulfilling their own aspirations by being clear about what they are trying to do and having the confidence and courage to pursue those ambitions, even within the collective aspirations of the family.”
Rise to the challenge
Within a family, it is not just about identifying who can run things; it means identifying who has the business skills, financial and entrepreneurial acumen to take things forward – a point echoed by Professor Bill Carney.
The customer may still be the focus of marketing, he says, but there is now a social imperative to prove to them how and why your businesses does what it does. The next generation are faced with this challenge, but also an unrivalled opportunity.
“These days you have a chance to be big, as with Instagram, Airbnb or Dropbox,” says Bill Carney. “Instragram was sold for $6bn, with an initial price of $1.2bn. Only 12 people were working for the company then, and not a single one of them was over 30 years of age.”
Not surprising, then, that new tech is disrupting the older business models and changing the shape of what it takes to succeed.
David Rowan, Editor of Wired magazine, echoes the point that the next generation is coming into the world of business at a hugely exciting time.
“We’re at the beginning of massive transformations enabled by technology, the next generation have the chance of taking this knowledge and building billion dollar companies,” he says.
“The great thing about the next generation is they don’t come with fixed ways of thinking and that gives them an advantage in a very fast-changing world where you don’t have to accept a fixed business model as the future.”
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