A family business is a world governed by other rules. Of course, they are governed by the rules of the market like all the others. But they also have a series of their own characteristics that must be known and taken into account for effective management that guarantees their continuity. In fact, thinking long-term and maintaining the purpose and mission of the company are two of the great challenges faced by this type of company, as recognized by Ramon Roqueta, CEO of Roqueta Origen, a company with origins wine and activity for 800 years.
In a family business there are three areas that are closely related: company, property and family, and the dynamics that take place within these areas define business development. The objective in these companies goes beyond economic results, since they must also work to ensure the continuity of the company and, at the same time, to maintain the unity of the family. To do this, they must know how to overcome business conflicts that can affect the family unit and, especially, they must know how to prepare the entire succession process, as Roqueta points out.
Recognizing when the time has come to pass the business on to the next generation is the key to the success of these companies because it is precisely in this succession process that “many of the problems of family businesses are concentrated”.
For this reason, it is very important to prepare this process, develop a prescribed protocol and do it "with external support", which can help in an environment where there are "different people with different views because they come from different times", explains Roqueta
Prudence, and keeping an eye on the company's mission and purpose, also help ensure business continuity. And all this, without giving up innovation. “Perhaps we do not apply disruptive innovations like a startup, but family businesses do not stop innovating. In our case we have twenty innovative projects underway”, he points out.
All these factors help to explain, perhaps, the success of family businesses, which are in many cases examples of resilience. “Family businesses have shown a great ability to adapt to change and last longer because they adapt better,” he adds.
According to TecnoCampus professor Carlos Ordax, in the management of a family business, success is defined both "from a business and family point of view."
In this sense, Ordax points to a series of risks that family businesses must avoid. Among them, treating the company as a family and the family as a company, confusing Ownership, Government and Management, thinking that management capacity is obtained by genetic inheritance or not respecting the rules of the market.
According to Ordax, it is a common mistake to believe that management is a genetic factor. It is the so-called “DNA syndrome”. As the expert recalls, "business management skills are learned skills and, to improve them, it is convenient to work on them specifically". He also advises that a difference be made "between ownership and management capacity, concepts that are not necessarily linked."
Another common phenomenon is the confusion between family and business. "Family and company must take into account different criteria," he explains, indicating that meritocracy must rule in the company, while relationships in the family are based on love.
In many family businesses, so-called "family councils" are created precisely to be able to separate what corresponds to the core business from other issues that belong to other areas. "Equity or philanthropic issues, but also training issues, such as how to prepare family members to be able to incorporate them into the company," Roqueta lists.
Taking into account the profitability, remuneration, information management and liquidity of the shares are aspects related to the rules of the market that must always be taken into account. In addition, family businesses should not confuse ownership, governance, and management, concepts that define who owns the shares, who is oriented towards the long term, and who is focused on the short term, respectively. "This circumstance is especially accentuated in the first generation, where there is usually a founder who controls all aspects of the company," explains Ordax.
Another common phenomenon is thinking that “it will not happen to us”. To do this, you have to be humble to be able to detect weaknesses, anticipate problems and solve them as soon as possible.
Knowing the dynamics that take place in the different areas of the family business is, precisely, the objective of a specialization course offered by HUB4T, the new Postgraduate Studies and Lifelong Learning Center of TecnoCampus.
Entitled How to successfully manage a family business?, the course is aimed at business families or non-family managers who want to deepen their knowledge and the dynamics that take place in family businesses. Specifically, it is designed both for business families, whether they are professionals with positions in the company or family members without positions in the company, as well as for management positions in family businesses, whether or not they are members of the family, and directors or managers of the Family Offices.
The program will begin on October 20 at TecnoCampus. During the course, the main problems and challenges that a family business must face to achieve its objectives will be described.
