Tips for successor generations

Quite a number of first, second, and third generation entrepreneurs have enrolled in AIM’s Master in Entrepreneurship program since its launch in 1999. One such is a third generation entrepreneur–let’s call him Mr. E–who shared with his guru some of his strategies and insights gained upon using the internet for improved customer relations.

Mr. E’s family is in the business of exporting metal products to hobbyists in the United States. Heretofore, he considered any involvement in the family business quite burdensome since had already founded several enterprises on his own. But he could not refuse his father’s call for assistance. After all, the source of his ME tuition was the family business.

As he was chatting with his customers over the internet, he began to realize that he was already using his customer’s jargon and was, in fact, enjoying it. The conversations with the customers led him to understand the customers’ needs better. These were immediately translated into quality, delivery, and productivity specifications that were implemented in the manufacture of the metal product. Such intimacy led to improved servicing of the customer.

Mr. E used to consider his annual trips to American trade shows as a junket and vacation. Now, he looks at them as marketing trips that enable him to bring home customer insights as well as customer orders. He makes sure that he is at the trade fair everyday from its opening to its closing hours. A quick tour of the trade fair no longer suffices. Neither is it simply a matter of saying that he visited the trade show.

Today, Mr. E makes it a point to be fully prepared for his US trips, not unlike the way he prepared well for his ME classes.

The only regret of this third generation entrepreneur is that he did not develop an early liking for the product of his family business. This would have allowed him to improve the firm’s performance earlier too.

Mr. E. ponders thus:

…I guess this is the reason why people are always more successful when their business is their passion at the same time. They talk about their passion, they live and breath it. That is why it is easy for them to find out what are the needs and wants of the market.

…Now, I realize that even if it is sometimes hard for the second and third generation entrepreneur to understand his/her business because it was simply handed down from one’s elders. It is still possible to develop a genuine interest in it. Because when you do so, life becomes so much easier. As a result, you will be able to understand the customer better. . .

Second and third generation entrepreneurs must realize that it is the founder’s passion that jump-started and grew the family business. It will need a leader with a similar passion to push its growth further. In fact, it is better to have a non-family member, i.e., a corporate entrepreneur or an intra-preneur with a passion for the business, rather than a family member who is devoid of such passion. In other words, it is incumbent on the passion-less successor generation to find someone else. But, as the example of Mr. E. has shown, it is never too late to try to develop an intense liking for one’s family business.

Just the same, let me add some caveats for the older generation family business entrepreneurs. One should not force passionless successor generations to run and, most likely, to ruin the family business. It is important to first understand their passion. If this does not violate family values, you can help by extending loans or by infusing fresh capital for their ventures. It is the responsibility of elders to make the family business become the best it can be and, at the same time, to provide needed support to the next generation so they can also become the best they can be.

(Alejandrino Ferreria is the dean of the Asian Center for Entrepreneurship of the Asian Institute of Management. For further comments and inquiries, you may contact him at: [email protected]. Published "Entrepreneur’s Helpline" columns can be viewed on the AIM website at http//: www.aim.edu.ph).