Entrepreneur Series: Beating the Multi-Generation Family Business Trap

For most family businesses, encouraging the younger generation to join the company is a challenge. Findings by The Family Business Institute indicate that just 30 per cent of family businesses survive the second generation, while only 10 per cent survive to the third.

For attendees at the HSBC Private Bank Entrepreneur Series, titled “Building Futures: Turning Today’s Dreams into Tomorrow’s Legacy”, held in Manila in October 2016, closing this gap was top of mind. At a multi-generational panel discussion, moderated by Michelle Lau, Regional Head of Wealth Planning, Private Wealth Solutions at HSBC Private Bank, three clear action points emerged for those planning their business succession:

Deliver on Motivation

HSBC’s global survey, The Essence of Enterprise, confirms that personal motivation is a critical factor for all entrepreneurs. And this is no more so than for Cristalle Belo. Being second-generation in a business family like the Belo Medical Group, which runs a chain of leading skincare clinics, could have been difficult, especially as, unlike her celebrated mother Dr Vicki Belo, studying medicine was not for her.

Instead, the family provided the opportunity for Cristalle to create a skincare business, Belo Essentials, which now supplies 50,000 stores in the Philippines. “I was 21, and it allowed me to create my own business under her umbrella,” she describes.

Share Your Values

Stephen Sy, founder of high-end lifestyle business, Focus Global, says that sharing the family’s values with his five children proved critical in encouraging them to join the business. “It’s very important to us to help our children have the correct values: thriftiness, hard work, honesty and respect for elders,” he explains.

Eldest child Stephanie Sy, a data scientist, says that studying at Stanford University gave her the skills necessary to start her own business, as well as contribute to the family business. “My parents were not too shocked when I told them, ‘Mum and Dad, you started your own business, and my grandparents did too. Now I’d like to give it a try.’” The result was the startup Thinking Machines Data Science, a data science consultancy, and a role with Focus Global as chief technology officer.

Encourage hard work

Those meeting Kenneth Yang of locally-owned McDonalds franchise Golden Arches Development Corporation (GADC), might think he simply strolled into the CEO role of the company founded by his father, George Yang.

They would be wrong. Kenneth worked tirelessly, learning every layer of the company he would eventually helm. “At 15, I didn’t really spend the summer playing, but working in McDonalds in Hong Kong.” He started out as crew, returning after college as a management trainee. And that integral knowledge reaped benefits: since taking over, GADC has boosted its number of outlets from about 200 to 480. Ultimately, the hard work helped him satisfy his own entrepreneurial ambition.

For more tips on attracting the younger generation to the family business, watch Stephen Sy and Stephanie Sy share further personal insights.

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