16 Aug 5 reasons to take over the family business
5 reasons to take over the family businessIntro
Growing up, you watched generations of relatives hard at work, devoted and united under a common cause. You saw labour rewarded with success, and also disagreements resolved with family unity in mind. Now older, you’ve had chances to contribute to their efforts and witnessed the daily rigor involved in the upkeep of the collective. One day, perhaps sooner than you expect, you may be faced with the decision to lead the family business.
The gravity of this decision cannot be underestimated – such power comes with huge responsibility! And yet, there are so many reasons why this could be the best career move, while you could be the best thing to happen to the company.
#1 You were raised by entrepreneurs, it’s in your blood
Running a business is far from being the easiest endeavor, but having watched your parents succeed before you, the grit and mindset it takes to keep the business afloat should come as second nature to you.
You don’t get to choose which family you are born into, and family isn’t always the easiest. But despite the disagreements, family is family and the truth is that your parents love and trust you enough to place the option of succeeding the family business in your hands. Make this decision wisely, and remember as you do that .
#2 Leadership is a privilege not many grow into at a young age
Do you dream of leading a team that believes in your vision? By picking up where your predecessors leave off, you have a chance to start even earlier than most. There are many benefits of taking up leadership positions early, including exposure to new, difficult situations and more chances to learn on the job. Needless to say, you won’t be kicking back in your board chair, but you can count on your new position to broaden your perspectives and strengthen your character.
#3 You can bring a fresh perspective to help the business endure generations to come
Your parents were foresighted when they began – that the company has made it this far is a testament to their capabilities. Even so, stagnation is an easy trap to fall into. Businesses must continue to evolve for the sake of sustainability.
When the time comes, the onus will be yours to take the company into the future with your fresh ideas and perspectives. Whether a rebranding project, a new business strategy focused on digital engagement or changing the company culture, your contributions can make all the difference in the ability of the organization to thrive in time to come. What will you do to ensure the longevity of your family’s legacy?
#4 You can leave your own children a great legacy
Imagine the pride they must feel to hand something they’ve worked so hard to build to you. Now imagine doing the same with your own successors. In addition to building up the business and strengthening the financial legacy you hope to hand to posterity, you are also reinforcing family traditions and values that will help shape future generations and provide meaningful direction for the business in years to come.
#5 So you can give back
Beyond accumulating wealth, more family firms are broadening their scope to give back to society. The stereotype of business as an inward-looking, self-centred endeavor no longer applies to a vast proportion of enterprises that now consider social impact a key indicator of a firm’s success.
Leading your own business gives you the power to decide how you’d like to contribute to the community and worldwide efforts at large, fulfilling both entrepreneurial and philanthropic aspirations to the benefit of those beyond your family. This is something you may not be able to influence while working for someone else.
First of all, it is very important that you be transparent with your family about your intentions regarding the business, and truthful about the future you see for yourself and the family business. This includes of course, making known to relevant family members your interest in assuming leadership in the company. Most conversations about business continuity are initiated by elders, but don’t let that stop you from beginning conversations with the company’s present leaders about succession. Establishing openness in communicating about the business makes for a climate of trust in which discussions about the family are made much easier.
Another crucial step is to work in the company yourself. In order for your family to feel comfortable leaving the business in your hands, you should demonstrate personal investment in the daily operations of the firm, and understand the company culture well. Furthermore, this exposure provides more grounds on which for you to decide whether working here is really for you. Just as a management trainee would, you may explore work in various departments – treat this as an internship and take the chance to learn about the company’s general approach.
Additionally, you can help ensure that work never gets in the way of family unity by discussing getting a universal life insurance plan with your parents. Legacy planning can be a complicated affair, so a little help can go a long way. This is also something you will have to consider much later, when you look to place the business in younger hands. Here’s an overview of what to look for.
Wealth distribution A succession plan is necessary for a smooth transition to prevent any disruption to the company, especially in situations where the younger, future leaders of the company are already whence employed. After taking stock of their assets, the present owners of the business (in this case your parents or other family members) will have to decide who will benefit from the estate, the order in which they will benefit, and how much. To ensure fair distribution of wealth, wealth equalization has to be taken into consideration.
Wealth equalization This aspect of business continuity applies most to families whose core assets lie in business ownership. The approach that might come to mind first is to split said assets evenly across the board. This assumes, however, that everyone contributes equally to the success of the company, and as a result can become a source of disharmony in the collective. Furthermore, visions for the business may vary dramatically within the group, which could lead to fragmentation within the company and stifled growth. Instead of spreading influence over the company thinly across all beneficiaries, a better approach would be to grant a controlling stake to the family scion, while capitalizing on a universal life insurance strategy to ensure that even those left without a stake in the company are equitably treated. Such a strategy can be instrumental to preserving family unity in the long term.
This policy is underwritten by Etiqa Insurance Pte. Ltd. (Company Reg. No 201331905K)
Protected up to specified limits by SDIC
As buying a life insurance policy is a long-term commitment, an early termination of the policy usually involves high costs and the surrender value, if any, that is payable to you may be zero or less than the total premiums paid.
This content is for reference only. You should seek advice from a financial adviser before deciding to purchase the policy. If you choose not to seek advice, you should consider if the policy is suitable for you. This advertisement has not been reviewed by the Monetary Authority of Singapore.
Information is accurate as at 19 June 2019.