If running and sustaining a business is difficult, running and sustaining a family business is extremely difficult. So much is invested resulting in a great deal of expectation placed from one generation to another.
There is a Vietnamese proverb that says, “The rich do not stay rich and the poor do not stay poor for three generations.” So much can change in the matter of three generations—for good or bad. It underscores the challenges of making sure the second generation stays as motivated as the first when they no longer have financial hardship to spur them on.
Not for nothing does a variant of that proverb suggest that the first generation makes the money, the second generation spends it, and the third generation blows it. From rice paddy back to rice paddy again; the wheel comes full circle.
Much has been written about the best way for family business owners to transfer that sense of responsibility to the next generation. Ultimately, it must be understood that transfer of the family business from one generation to another is not a given—it must be earned.
My father has been quoted on CNBC regarding this saying: “I have to choose the right person to become the CEO of the company and give this responsibility to the most competent individual. I hope my children will work hard to achieve that distinction, instead of automatically assuming they’ll be given the position because inheriting a business is not a privilege, but a responsibility.”
This was understood between me and my siblings growing up. He instilled a culture of hard work where merit was rewarded. As a result, we embraced this approach to work and have sought to work as hard as he does.
When families establish expectations from the start and teach the next generation early-on the purpose behind the company’s mission, core values, and vision, the likelihood of successful family succession increases. When family members understand the hard work, vision, and sacrifice required to build and sustain the business, there will be a level of respect needed to carry on that vision.
Learn more about how THP has successfully won the generation game by visiting my website.