The writer lists out various challenges faced by the new generation in a family business and shares solutions to each of them
The author is Director, Marketing of Lawrence and Mayo, a family owned business. He is a passionate entrepreneurial enthusiast and mentors various early stage businesses and mature family businesses. Email: vivekm@lawrenceandmayo.co.in
Challenges are said to be the spice of life. There is no fun in achieving the simple, especially if you are a talented and ambitious individual, which I am sure you are, if you are reading this.
I would like to start this piece with an issue that may appear totally unrelated to the topic, but, as you will see on reading further, it would merge beautifully with the topic.
The question I have is, why is ‘Dad’s Day’ celebrated with lesser enthusiasm (in general, of course), than ‘Mum’s Day’?
You could definitely offer different reasons for the same, and I am sure they would all be valid reasons, but my take on this is that it is because dads are slogging it in at the office / shop / factory, most of the time, and are rarely home, as they are working hard for their families.
Mums definitely work, and work harder; but most mums are mainly around the home most of the time, and hence have more time to spend with their children unless they are working and have a career, too.
In the world of the family business as well, this applies to a large extent.
And with the type of businesses that are in vogue nowadays, it takes most of them just around 6, 7 or 8 years to reach a valuation of billions of dollars (mind you, it is not turnover, and it is definitely not profits, but valuation of which we are speaking).
For a traditional family business which has been in existence for about two or three generations, the youngsters of today are more drawn towards the type of startups they read about on ‘ InShorts’ or view in some videos forwarded by friends.
Now, I am going to list the challenges that the new generation faces in attempting to cope with the older generation of family business. Some of the challenges are:
a) Mindset and area of business
b) Methodology of running the business
c) Borrowing money to run the business
d) Marketing methodology of promoting the business
e) To sell the business or not and start something new or not
a) Mindset and area of business: Many youngsters today feel that the kind of ‘old’ and ‘traditional businesses’ started by their grandfather or father is actually useless to continue running today, as they feel it has no future. In some cases, they may be right, especially if the business offering is an almost obsolete product or service. But there is another side of the argument – the business obviously worked, it produced good results, it clothed and fed the family, and that is why the family is in such a financially strong position today.
The Solution: Let the youngsters start their own enterprise; after a few months or a year’s work experience with the family business or if they wish to, outside, with a limited capital from dad’s personal savings, but not from money taken out of the ‘traditional business.’
b) Methodology of running the business: Fathers want their sons and daughters to be a carbon copy of themselves, but being ‘digitally sharper’ in appearance. Sorry, this is not possible because each person is unique – remember the words of Rabindranath Tagore, who wisely said: “Children are born from us but we don’t own them.” The children may have different talents, abilities, and interests, and it would be good to encourage them to follow their own path; of course, while guiding them all the way. The dads most probably have an old Skybag or VIP briefcase, which they have been carrying for the last 25-35 years – they want a joint cabin with all other Directors. They have their faithful staff who can produce any paper, file and document, and, in general, they are more loved than the younger generation.
The Solution: Do not renovate the full office, but create a space for the youngsters, a new section, or better still, offer them an adjoining office. Nice bright open windows, white clear paint on the walls, and make the environment lively. Do not forget your blue jeans and you could maybe opt for Friday dressing (and not just on Fridays).
c) Borrowing money to run the business: The older generation do not prefer to borrow money from the bank, moneylender, or even from family or friends. As far as possible, this is the right idea. Live within your means. Let the business generate its own income and profit for growth and expansion. The new generation prefers to ‘bootstrap’ – to borrow money even before day one from family and friends. Angel Funding, Venture Capital Funding, etc., are terms which they are comfortable with.
The Solution: Let the next generation try out their ideas, whether they fail or succeed, they will learn, one way or the other. Nevertheless, let them know the importance of taking responsibility.
d) Marketing methodology of promoting the business: Fathers and the older generations would want the ‘product’ to speak for itself. It should be excellent in quality, and then the subsequent word-of-mouth publicity will get you the sales. The new generation wants quick results. They believe more in the power of digital advertising. For them catalogues and brochures are untouchable and outdated.
The Solution: Let both forms of marketing run in parallel. Develop a methodology to see who brings in what type of income and sales with their preferred choice. Keep measuring this for over at least two years before taking a decision.
e) To sell the business or not and start something new or not: The younger generation does not like the old ‘fuddy-duddy’ type of businesses. They like the new-age businesses that save the environment and ‘Save the World’.
The Solution: Let them start a vertical of their own. Let the traditional, old-fashioned, and fuddy-duddy business, as well as the new entity, run separately. Do not discourage youngsters. Be open to new ideas and new thinking. Who knows? Anyone could be right!
In short, the old has to learn to absorb ideas from the new, and the new should respect the old and realise that what they are today, is a result of their previous generations succeeding by running the family business in the way they knew best. Both need to synergise, combine forces, and move on ahead together in these challenging times.
