Family businesses can even survive 5 generations if there's trust: Ayushi Patni, Campden Family Connect
Patni says that having a succession plan in place doesn’t necessarily mean a smooth transition.
By Rashmi Menon, ET Bureau |
BCCL
Succession planning is always tedious when it comes to family businesses. And it is something that Ayushi Patni, deals with regularly. Family business patriarchs often approach her on how to ensure seamless transition.
“The problem with family business heads is that they don’t know how to hand over the reins to the next generation,” says Patni, director, Campden Family Connect (a platform for ultrahigh net worth family businesses to network). “We had a family where the father was 80 and his two sons were 50 and 55. But even now the sons complained of having little control [over the business].”
Patni says many family businesses are now considering setting up a family constitution, as it will lay down rules and regulations on paper.
No confidence
A common grouse that Patni hears from the older and younger generation is the lack of confidence and trust in each other. While the elders in the family business doubt the abilities of the next generation, the younger generation accuse the older generation of not letting go of control.
Sustenance of wealth over multi-generations is another issue business families are grappling with. “There is a saying that a family business never survives after the third generation. But that’s not true. We have seen fourth and fifth generation of families come to us. It is just a matter of creating a system and having that trust,” says Patni, who is a next-gen entrepreneur from the Patni family, which was behind Patni Computers Systems.
Mixing interest
Apart from the inherent challenges today, a growing number of next-gen entrepreneurs are losing interest in the traditional family-run business. Instead, they are keen to find a synergy between their passion and the business. “A lot of the next-gen members tell us, ‘We want to do something that we like, but we also don’t want to let go of the family business’,” says Patni. “Many of them are influenced by the growth they see in Silicon Valley and want to invest in startups. Instead of starting something on their own, they prefer to invest in four different startups and just oversee them.”
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“The problem with family business heads is that they don’t know how to hand over the reins to the next generation,” says Patni, director, Campden Family Connect (a platform for ultrahigh net worth family businesses to network). “We had a family where the father was 80 and his two sons were 50 and 55. But even now the sons complained of having little control [over the business].”
Patni says many family businesses are now considering setting up a family constitution, as it will lay down rules and regulations on paper.
No confidence
A common grouse that Patni hears from the older and younger generation is the lack of confidence and trust in each other. While the elders in the family business doubt the abilities of the next generation, the younger generation accuse the older generation of not letting go of control.
Sustenance of wealth over multi-generations is another issue business families are grappling with. “There is a saying that a family business never survives after the third generation. But that’s not true. We have seen fourth and fifth generation of families come to us. It is just a matter of creating a system and having that trust,” says Patni, who is a next-gen entrepreneur from the Patni family, which was behind Patni Computers Systems.
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Mixing interest
Apart from the inherent challenges today, a growing number of next-gen entrepreneurs are losing interest in the traditional family-run business. Instead, they are keen to find a synergy between their passion and the business. “A lot of the next-gen members tell us, ‘We want to do something that we like, but we also don’t want to let go of the family business’,” says Patni. “Many of them are influenced by the growth they see in Silicon Valley and want to invest in startups. Instead of starting something on their own, they prefer to invest in four different startups and just oversee them.”
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