Family businesses must think about maintaining the legacy, not just being a business

Entrepreneurship in Mexico has grown, either because of the desire to have something of their own, because of the ease of managing time or as an option in the face of unemployment; however, most of the cases have something in common: to create businesses to support the family, thus giving, on many occasions, the Birth of a family business.

An example of the importance of family businesses is that in Mexico they represent 90% of economic units and they are generators of 75% of employment, in addition to contributing 95% to the Gross Domestic Product, according to the Institute of Entrepreneurial Families for Mexico (IFEM) and LATAM. This positions the country in fifth place with the most family businesses in Latin America.

Despite being the majority, they are also the ones that suffer the most conflicts to maintain themselves over time, above all, because many start with the idea of ​​being a business that generates income, without having long-term vision.

“A company becomes family in the sense of long term projection, that is, if I set up a restaurant, butcher shop, gift shop or beauty salon, for example, you see how to evolve, professionalize and clearly identify how to use resources so that it lasts. Being a family member is not the same as not being a professional”, stated María Fonseca, director of IFEM and Latin America at the Tecnológico de Monterrey Business School, in an interview with El Economista.

He explained that the process of transforming from a business to a completely family business begins by strengthening the business, when it is proposed that the following generations manage it. This requires preparing people on how to manage the organization, the business model, lead, among other elements.

Why do companies die?

Of family businesses in Latin America, 60% are in the first or second generation, 30% have already reached the third generation and only 10% in the fourth generation or higher. The reasons for not transcending are the lack of long-term vision, as well as the lack of business management.

“If a founder only sees the business to get ahead out of necessity, the opportunity he saw was exhausted or he no longer wants to work, the company ends and nothing happens, it is not bad either because there was no intention of transferring the legacy. It never stopped being an enterprise but it did not transcend to more, It’s not a failure just a decision made.”

But what if they want to last? Why don’t they transcend? The reasons are in the management, training of new generations and innovation.

Many companies are not prepared for changes, knowing how to respond quickly to any situation and diversifying. For example, in the pandemic many did not survive, especially from the sectors of tourism or food, Among the main reasons is not having prepared or adapted to the changes.

Also, there is the challenge of incorporate the new generations from the beginning, play with the roles of the organization and create new spaces for the future.

“If it is a family business, you can build a competitive advantage by being a member of a business family because you have multiple spaces to learn and practice. The theme is to train the new generations.”

The creators of the company must prepare themselves for train, respect and understand that each generation can contribute new things to the legacy that is being built. “The legacy is not only the company, there are many things and you have to live up to the activity.”

Examples of leading family businesses that transcended are Tous, Devlyn, Nike, Mars, Walmart y Dell, some of these with more than 100 years of operation. The key to its success is looking to the future, adding the youngest and embodying its values ​​in the organization.

reflection of the family

For Fonseca, among the greatest advantages of family businesses is that they are built on the family values, the environment is more human and this will also be transmitted by the organization. The family reputation will be seen in the market.

“The company is different from the family. You have to understand what conflicts you have, which ones can arise and learn to recognize the values ​​that add value. This will be the biggest differentiator.”

Part of these values ​​must be reflected in the management, by instilling the value of the business in descendants, by designating the people who will collaborate and knowing how to choose them, as well as differentiating what brotherhood of abilities. Also, respect when a person does not want to be part of the company.