BUSINESS MENTOR: What is Generation Syndrome in Family Business?

By Armando “BUTZ” Bartolome

Starting a family business came out of love, passion, dedication, and strong commitment. The business has to go through so many struggles along the way, but with continuous effort and with the family bringing all their support, the family business slowly reaches its goal.

But the time comes when the founder needs to step down, either due to some circumstances or because he may be too old to handle such business. The children are the next in line to take his place and hopefully continue what he has started. Unfortunately, not all children may have the same enthusiasm as their father (or mother). They may have involved themselves with other ventures or may have worked in other fields of interest.  Broken dreams…..When this happens, the family business slowly collapses and even if it could be heartbreaking, there may be a need to close the business for good. Conflict of interests, unresolved family issues and poor management does not only affect the family members of the business but as well as the lives of the people that have worked for them for so many years.

Second generation syndrome, as this is most commonly known for, is the result of having a weak to almost loss of interest in continuing the business. For the supposed successors of the business, they may not have seen the same goals and aspirations as those that the first generation has. They may have seen better opportunities outside their family business and instead of sustaining the business they would rather stay with what they think would be more appropriate for them to get involved with.

The founder may still, however, insist on letting his successor continue with the business. Putting a big risk, however, it may be worth a shot. But, there is a huge possibility of not having the family business as successful as the first generation.

The second generation may not value the family business as much as the first generation, thus, failure is not far behind. Family business failure maybe because of the following:

1. The successor of the family business maybe not well adept at the kind of business that they have. The business may have just been handed to them without truly understanding the” ins and outs” of the business.
2. When a family member is forced into managing the business, apart from not having much knowledge and interest, laziness may persist. The lack in having enthusiasm as that of the first generation will be of no help running the business.
3. Having second thoughts of continuing the business and see other opportunities instead.
4. The business has thrived long enough because the founder has the passion and desire to succeed. If the second generation lacks the same passion, how can these successors maintain good relationships among his employees and clients?
5. When the founder exists the business, he may have taken out a lot of money and left just enough for the business. In times where the economy is struggling, this may not be good. It could definitely affect the overall sustainability of the whole company due to insufficient resources.
6. The lack of knowledge to run the business will never get it to succeed. The founder could not just tell his children that he is retiring and they need to start working for the company without having the proper training and developing the right skills to manage the business.
7. The founder, with all his dreams and aspirations in mind, take time to expand his network. He always has the time to meet different people because in that way, he builds a good relationship with them which can be beneficial for the business. However, if the successors do not have the same passion as its founder, the loss of interest of the people declines and that will surely affect the business, BIG TIME! If you are the boss of any company, you should maintain a good relationship with other people because a company becomes successful if people feel that they are given importance.
8. Having a good relationship with people also means putting respect to those who helped the company to get where it is. If the second generation does not acknowledge such, slowly, people would get tired of helping and would care less and that could be one huge factor that could get the business down the drain.
9. The second generation may not exert the same effort as the first generation, hence, he has this employee mentality in him where he just sits down all day, unmindful of what his real role in the business and just waits for the paycheck each month. Sure enough, the company would not make it…not even in 6 months of such poor management.
10. The lack of passion, knowledge, interest and skill will all result in being unmotivated. And we know that when there is hardly any motivation, one tends to remain still without any progress. And being stagnant in such circumstances will surely harm the business.
11. It is a bit funny how these second-generation owners would start living a world of craziness with all those fancy cars, going to different places and endlessly partying.  Considering that they want to have this kind of life, their lack of interest to sustain the business and continuously spend an enormous amount of money will end up in bankruptcy.
12. The lack of knowledge and interest is bad enough. Maintaining employees who are no longer effective with their work is worse. The second generation may think that old employees are enough to help them succeed without them doing much effort. But there also comes a time that old employees need to be changed and that there is a need to hire new ones who can help the business with their new, fresh input that may be appropriate for the company to progress.

Indeed, it is not as easy to hand down a business to the second generation if these family members lack the same dedication and enthusiasm as the first generation. Probably, instead of totally losing all assets in the process, might as well sell the company to others who might be able to continue the same passion as its founder.