The dilemma of running family-owned businesses
IN FAMILY businesses, there is always the expectation that a successor from within the family will take over the reins of management. However, many family-owned enterprises have had to grapple with the reality that prospective successors may lack the interest to carry forward the family legacy, driven instead by personal career aspirations. When this happens, businesses are left to deal with the uncertainty of leadership transition.
The situation is relatable to Clyde Douglas, who operates a grocery shop in Spanish Town that was started by his parents in the 1950s. He noted that none of his seven adult children express any desire in taking over the business as they are all employed elsewhere. One of his older sons assists with the delivery of cooking gas on weekends. He is hopeful that at least one of his two last sons, who still live at home with him, will eventually come on board.
Douglas said that when his father passed on, the business was closed for two years as he was employed at a factory repairing machines. He decided to resurrect the business when his work was not providing sufficient income. He subsequently expanded the business to include the distribution of cooking gas.
“I had a lot of dreams and the workplace wasn’t providing the amount of cash that would fulfil my dreams. I realised that I had to start a business in order to achieve the things I wanted to do. I’m a familythinking person and I wanted to build my house. I wanted my family to be comfortable,” he said, adding that he was only able to accomplish those goals, as well as send his children to university without taking a loan, as a result of operating the grocery shop.
Douglas recalled that as an early teen, his father would allow him to oversee the business whenever he needed to take some rest in the day; hence, he was the only one of his four siblings who eventually took over the family business and has been running it for more than three decades.
“Get them involved from early,” he suggested as a possible means of stimulating interest in children to be actively involved and to become successors.
JULETTE CAMERON’S STORY
Julette Cameron’s story is a little different from Douglas’ dilemma. Cameron, the operator of the Spanish Town-based Harco Trading Ltd, a well-established furniture-making and refurbishing business started by her father in 1980, shared that initially she was not part of the operation of the business. Instead, she opted to pursue her own career ambition as a teacher. Thirty-six years ago, she joined the company as a secretary.
“My eldest sister, who actually held the business together, became ill and was unable to manage, so I came in to understudy her,” said Cameron, adding that her brother was also active in the business since the inception until his passing in 2022. She is currently the only sibling who is involved in the operation of the business, which employs 15 persons.
Now the managing director, Cameron has expanded the business.
“Originally, we were just doing furniture. Right now, we are doing cupboards, closets and bathroom vanities.”
She pointed out that her children are not directly involved in the operation of the business as they are engaged in their own career goals. Her son, however, helps with purchasing stock for the company. As it relates to succession planning, she anticipates that her son will oversee the business while he continues to pursue his career.
Sharon Smith, head in the Business Banking Division at JN Bank, said that generational transitions in familyowned businesses can be sometimes complex and challenging.
“The lack of interest from children in continuing the family business can stem from various factors, and these reasons may vary based on individual circumstances,” she pointed out.
“Younger family members may have career aspirations and interests that are different from the nature of the family business. They may have different skill sets, educational backgrounds, and passions that lead them towards careers in areas unrelated to the family business. For instance, if the family business is in manufacturing but a young adult is passionate about technology or the arts, their aspirations may not align with the traditional nature of the family enterprise, hence they will not want to work in the business,” she explained.
Smith emphasised that disinterest in entrepreneurship may not necessarily be the reason why many shy away from taking the reins of a business. Instead, they may prefer to start their own ventures in a different area and establish something new and unique, rather than continuing an existing family legacy.
“One also needs to be mindful that with work opportunities overseas, younger family members may gravitate to those opportunities instead,” she added.
She further pointed out that the younger generation often has a strong affinity for technology and innovation. If the family business lags in adopting modern technologies, they will be drawn to other places of employment where they can use these advancements.
Another factor that Smith raised that negatively impacts family businesses is when relationships among family members are not harmonious.
“It creates conflict that prevents them from working together in a business environment,” she said.
The business development and banking expert stressed the importance of encouraging succession planning in family businesses, as it is essential for ensuring continuity and long-term success.
“Begin succession planning as early as possible. Early planning allows for the identification of potential successors, their development, and the gradual transfer of responsibilities. If this doesn’t work, than successors should be encouraged to lease the business, which then would become a side income for them,” she advised.