Michal Šubín from Subin & Partners: What is the biggest mistake in family business? Doing nothing.
Up to 60% of Slovakia's GDP relies on family businesses, yet their founders face surprisingly similar mistakes. Why does doing nothing pose the greatest threat to companies with million-dollar turnovers? And what happens if the sole manager doesn't come to work tomorrow? In the new episode of Biznislab with Michal Šubin, an expert in family business, we reveal how to avoid the most common failures and secure the future of family assets.
Family Business Rests on the Shoulders of One Person
Despite the fact that these businesses employ a significant portion of the population across all sectors - from engineering to the HORECA segment - a significant part of these companies still depends on one manager. It is mostly the founder who possesses all the legal means to run the company. He centralizes know-how, contacts, financial, property, and supplier-customer structure, thereby exposing the regular operation of the company and his own family to enormous risk.
Founders who started their businesses after 1989 are now aged 60+ and face the biggest deal of their lives: handing over the company. This process is challenging and affects not only the company but also family relationships.
Planning Crisis: Why 60% of Companies Make the Biggest Mistake
Research has shown that up to 60% of family businesses do not plan to make any changes, which means they do not have a plan prepared for unexpected events. Although founders are aware of the problem, they do not address it and postpone the solution.
The general answer to the question of what is the biggest mistake in family business is therefore doing nothing and letting the situation "fester." Yet, it is enough to start with simple steps to prevent a fatal collapse of the company in case the sole director is unable to make decisions.
Rescue Operational Plan: Three Key Steps
What should a "rescue operational plan" contain? Michal Šubina advises:
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Diversify Directorship: Do not live under the illusion that you can be the sole director.
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Share Know-How: Prepare the team and family. It is necessary for them to know the suppliers, clients, and have an overview of the financial situation.
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Talk About Assets: Start communicating with children about the assets and financial reality of the company as early as their 15th - 16th year of life, so they are prepared for responsibility.
Biggest Failures in Generational Change
The most common mistake in handing over assets is when parents prepare a plan without the children, and they subsequently reject it. It is important that it is not a surprise of the type "here is the company leadership as a reward." The key is to maintain harmony between assets and family and have a plan ready that allows for conflict resolution – for example, if one of the siblings leaves the business. Remember that "every comma in that contract is not important when we are friends. But precisely then, when we stop being."
From the interview, it is clear that the world of family business is full of risks that can be eliminated with timely planning and open communication.
Listen to this episode and find out:
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How to prepare a "rescue operational plan."
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How to prepare a plan for generational change.
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How and when to involve children, or successors, in the structure and financial reality of the company.
