Recently, I asked myself, “What could be a new and lively way to share the knowledge that EY and others have on family businesses?” So, with ideas from colleagues, we came up with the concept of the EY Family Business blog. What’s behind it? Well, I think it’s straightforward. EY experts, family business managers and academics will discuss ideas pertinent to global family businesses. New entries will be posted weekly.
Blog entries will be sharp, crisp and often opinionated. They are designed to engage family businesses. To provide focus for the blog, I have identified three themes that are of particular interest to family businesses: succession, growth and wealth management.
Succession is central to any family business, regardless of size. On paper, succession sounds easy. After all, what’s so difficult about finding someone to pass the leadership of the business over to? But, as we know, it’s not simple. Questions arise about the right time to retire and bring in new leadership. And what works for one business might not work for another.
For example, should aged family business leaders step down for the health of their businesses? Or could their departure be a bad thing? Are family businesses more successful when they have a transparent and robust succession plan? How can businesses engage the next generation, so succession works?
I know the EY Family Business blog will help answer some of these questions, or at least shed light on the dilemmas they pose.
To be dynamic, family businesses need to grow. But how do they remain dynamic from one generation to the next? How can they instill entrepreneurship in the next generation? As many know, you cannot create entrepreneurs by education alone. But you can provide conditions that enable entrepreneurs to flourish. Insights from our bloggers will help define these conditions.
Furthermore, EY’s Entrepreneur Of The YearTM program gives us unprecedented insights into what makes an entrepreneur tick. The blog can help to bring these insights to a wider community.
Family businesses can also grow by expanding into other countries. For example, German family business Batterien-Montage-Zentrum GmbH (BMZ), whose owner Sven Bauer won the EY Entrepreneur Of The Year in the industry category in Germany last year, teamed up successfully with another German family business to expand into the US. This worked for BMZ because its partner shared the same values and culture. But what should family businesses look for in a partnership? The blog will help to provide answers.
I know that many family enterprises get so involved with the business that they forget about family finances. Schlecker, a German family-owned retail chain that, at its peak, had revenues of €4b, fell into financial difficulties a few years ago. The family hadn’t set up wealth management structures outside of the business. This eventually proved costly for family members. Many family businesses say that to manage their business is to manage their wealth. I think the Schlecker case proves otherwise.
To avoid a Schlecker-like disaster, larger family businesses should set up family offices. To manage wealth through successive generations also presents challenges. The more generations the business passes through, the more complicated family wealth management becomes. I know that our bloggers will shed light on these areas of family wealth management.
The bloggers will touch on many more issues. I am confident that you will find their contributions useful and insightful – enough, I hope, for you to add to the discussion through the “Leave a reply” section at the end of the blog.
Peter Englisch, Partner, Global and EMEIA Family Business Leader, EY