Tag Archives: downsizing

Growing up with downsizing

Albert Jan Thomassen
Albert Jan Thomassen

Do you sometimes think of the ‘good old days’ when you started in your family business with lots of business opportunities and a growing economy? As your children’s generation is starting their career in business life – things are very different…

In the US and Europe economies are suffering from recessions and limited growth. Many family businesses face mature markets, populations that are shrinking, and fierce competition from other continents. Companies are getting used to a constant flow of cost cutting and downsizing operations. But is that the nature of an entrepreneur?

Most family business owners I speak to say no to this question. They say entrepreneurship is about seeking opportunities, about adding new business activities, about strolling the market and getting ideas for new products or services.  Many young people tell me these are important entrepreneurial skills but their own family business may not be the right place to learn those skills.

So what to do about this and how to teach those important skills to the next generation? Here are a few examples gathered from family businesses in those suffering economies that want to stimulate the right entrepreneurial skills for their next generation. 

Start your own business
A fourth generation family business stimulates their next generation members to start their own business as one of the ways to gain outside experience. They value it equally to working in another company for a number of years before joining the family business. 

Explore a totally new market
Stimulated by their father, three brothers went to China to explore new market opportunities for their company. They hardly got support and had to find their way. Two brothers stayed in China and now have their own company. The third is now working in the family business and is leading new business activities.

Provide equity to next generation members
One family that has acted for a number of years as informal investors with their own private equity firm – decided to actively provide equity to next generation members who want to start a new business venture. Upon submission of a business plan the family investment committee assesses the proposal and provides equity. They acknowledge that it is a risk and you may also fail. But as long as you are willing to learn and expand you skills the family sees it as a long-term investment in the entrepreneurial culture of their family.

Become venture philanthropists
Another family who sold a substantial part of their family business decided to totally reorganize their charity activities. Instead of donating to projects they now invest in social ventures. But more importantly the next generation is actively involved in the selection and governance of those social ventures, thereby developing skills to seek opportunities and build new businesses.

Start a new business venture
An old time idea but maybe even more valid now is to give a next generation member that is working in the family business the task to open a new location, start a new business activity or start in a new market where the company wasn’t active before. This stimulates seeking opportunities and if successful it is maybe the best way to boost confidence and prepare for executive responsibility.

Business should be fun!  Downsizing usually is not, so business families should create other opportunities for their next generation to acquire the right entrepreneurial skills and confidence for their future and the future of the family business.

Do you have other great ideas or experiences for the next generation? Your reactions on this blog are most welcome.