No one ever said it was easy being an entrepreneur. Whether you're in the early stages of your statrup, just secured funding for your startup or you are ready for product launch, there will always be those three components when you ask yourself if this whole entrepreneur thing is worth it. Instead of giving up and throwing-in the proverbial white towel, this forum will help in giving you all the motivation you need to achieve your result.
It is logical to understand that in most families, Emotions serve as the pillars of almost all relationships In a Business or Enterprise, however, it is Economics which defines relationships!
Emotions & Economics are evidently, opposites of each other. Apart from the first letter, these two words hardly have anything else in common. ‘Emotions’ are feelings of the heart …while ‘Economics’only understands that which is rational and supported by valid theories.
Interestingly, family businesses, are a unique combination of both, Emotions and Economics!
This is why they are rather a delicate form of Enterprise. Undoubtedly, they hold huge potential, but they also tend to become more & more fragile …with time.
Family Businesses and India
Surprisingly enough, family businesses make up between 80% to 85% of the world’s GDP and fund 85%
of all start-ups across the globe! Not so surprisingly, however, the rate at which family businesses die out is alarmingly fast. 70% of family businesses fail to transition into the 2ndgeneration, from the 30% that survive, only 12% sustain up-to-the 3rdgeneration and from that 12%, a mere 4% are able to usher in the 4thgeneration.
This means that a majority of family businesses are unable to survive beyond 60 to 70 years. The challenge here, in fact, is not informing legacy businesses, but rather …in sustaining them. Emotions are definitely required when an enterprise starts. Raw passion, energy, and a die-hard attitude are vital to making a start-up successful. Similarly, in family businesses too, when the founder starts the adventure, and it is a progressive one, the venture takes the normal route that any successful start-up would and grows at a phenomenal rate in the initial years. By the time the second-generation steps in, however, the growth rates start reducing …. and this is not necessarily because ‘opportunities’ in that sector have all been exploited …the business and that market sector still has a lot of potential but for some reason the second-generation (more often than not) is to exploit these opportunities in the manner the first generation was able to. In fact, many times, the second-generation owners know exactly what is to be done, but they are unable to do it.
The business, therefore, starts plateauing …and by the time the 3rdgeneration has stepped in, the graph of the enterprise has already commenced its downwards trajectory and sustainability of the family business becomes a serious question mark!
The above, however, does not hold true for professionally managed companies. If the erstwhile Chairman / Directors retire, the next batch is more often than not able to deliver results which are as good as or sometimes even better than the earlier set of leaders ... and this trend continues. The result is that the life
of companies with professionally managed boards far outstrips that of family-run enterprises. This is a fact. Actually, the problem here lies in the fact that family business members often fail to understand the difference between “owning a company …and managing a company”.
In most family enterprises, the owners themselves are the managers & are (personally) involved in day to day nitty gritty of the business. Contrary to popular belief, this type of micro-management by an owner is actually harmful to a family business, especially if the business is in a mature stage of its lifecycle.It is true that when a business is in its early stages of life, it does requires an “owners” mentality to grow…and this mentality is easily provided by the founder or the 1stgeneration. However, once the start-up has reached a level of maturity, cash flows are stable & business is growing …the same start-up then requires a “manager’s” mentality to sustain itself!This is why an ‘Entrepreneur’ is very different from a ‘Manager’. It’s really not about skills here but more about the character and mindset of the individual. The way an Entrepreneur approaches a problem is very different from the way a Manager would and this is a vital point which is often missed by most family business houses.
In family businesses, the business always takes centre stage. Business is discussed at the breakfast table, at lunch, over dinner, in the bedroom, and even in the bathroom! The definition of work-life balance for a family business member is different from that of a professional manager.
Family members usually grow up listening to business stories, business problems, balance sheets, new ideas & new ventures from an early age. Their world and definition of earning a livelihood are quite different than those who don’t come from family business houses …at-least this is true for most family business members if not all. In fact, statistics show that, given a choice, up to 70% of family members desire to join the family business because of their mind being pre-conditioned to doing so from an early age. It's just the way things are and there’s nothing wrong about it.
The problems actually begin by the time the business has entered into the second generation and especially when it enters into the 3rdgeneration. By this time, the business is no longer a start-up and does not require an entrepreneurial mindset to run itself. Rather it requires a managerial one and this is precisely where most family businesses fumble …because family members turn out to be great entrepreneurs ... but they fail to be good managers!
The Important Factors
The risk appetite, mindset, access to resources, exposure & confidence levels make family members excellent candidates to undertake new ventures, but when it comes to managing processes, family members often lack the discipline, the patience, the skill-set and many a time even the required experience to create, manage and sustain business processes. This is where professional managers and consultants are required to come in and take over ... and indeed this is where the family members need to bow out and delegate. The family members can continue being the owners and even the face of the company (if required), but they need to stop wasting their time in day to day nitty gritty and start utilising their talents in setting up new (greenfield) projects which would eventually serve as excellent diversification platforms to the existing family business and generate immense value to both the family members (personally) and the family business.After all, creating an enterprise …and sustaining an enterprise are really two very different ball games …and require two very different mindsets! Hence, if a family business is to survive the torments of time, an ideal & time-tested policy would be allowing the management of the on-going businesses to be led by ‘Professional Managers’ …while (simultaneously) inspiring & motivating the members of the family to become Entrepreneurs!
Twenty percent of small businesses fail within their first year. Entrepreneurship is no walk in the park. In fact, the amount of new businesses that fail exceed the number that succeed. That’s why it’s more important than ever to create a unique product or service that helps you stand out from the rest.
However, don’t be discouraged. If you believe in your business, passion will prevail. On average, 75 percent of small-business owners are confident in their company. And why shouldn’t they be? They’ve turned their passion into profit. Yet, keep in mind it’s important not to be overly confident. Instead, take things one step at a time. Typically, 20 percent of small businesses fail in their first year, 50 percent in their fifth year and 70 percent after a decade of being in business.
A number of factors play into a business’s closing, such as location, the current market, cash flow and more. The number of reason most small businesses fail is due to cash flow, and California cities such …
Mark Elliot Zuckerberg is an American computer
programmer and Internet entrepreneur. He is a co-founder of Facebook, and is currently its chairman and chief
executive officer. Zuckerberg
launched Facebook from his Harvard
University dormitory room on February 4, 2004 with college
roommates and fellow Harvard students Eduardo Saverin, Andrew McCollum, Dustin Moskovitz, and Chris Hughes. The group then introduced Facebook to other college
campuses. Facebook expanded rapidly, reaching one billion users by 2012. During
this time, Zuckerberg became involved in various legal disputes brought by his
friends and cofounders, who claimed they were due a share of the company based
upon their involvement during its development phase. Early
Life Mark Elliot Zuckerberg was born on May 14, 1984, and
grew up in the suburbs of New York, Dobbs Ferry. He was the second of four
children and the only son in the educated family. Mark’s father, Edward
Zuckerberg, is a dentist and mother, Karen Zuckerberg, is …
Étienne Arnault was born on the 5th of March 1949. He is a
French business magnate, an investor, and an art collector. Arnault is
the chairman and Chief Executive Officer (CEO) of LVMH, the world's largest
luxury-goods company. He is the richest person in France and the fourth richest
person in the world according to Forbes magazine,
with a net worth of $75.5 billion, as of March 2018. EARLY LIFE After graduation, Arnault joined his father's company,
in 1971. In 1976, he convinced his father to liquidate the construction
division of the company for 40 million French francs and to change the focus of the company to real estate.
Using the name Férinel, the new company developed a specialty in holiday
accommodation. Named the Director of Company Development in 1974, he
became the CEO in 1977. In 1979, he succeeded his father as president of the
company. CAREER In 1984, with the help of Antoine Bernheim, a senior
partner of Lazard Frères, Arnault acquired the Financière A…
Gates is an American business magnate, who co-founded Microsoft, the world’s
largest personal computer software company. He consistently rank in the top
list of the world wealthiest people, he is one of the world best known
entrepreneur of the personal computer revolution. He is also the world most
generous philanthropist, who has donated over $28 billion to charity. Here are
his top 10 rules for success. 1.Have
you are going to start a company you need so much energy that you use to
overcome your feeling of risk. At the beginning it’s going to look so scary
especially given that you don’t have any experience as in the case for most
startups, you are going to make a lot of mistakes but if you have so much
energy rushing through you, you will be able to overcome your mistakes and that
of your team, you will also be able to guide your team into achieving the
desired result because energy is contagious. 2. Have
a Bad Experience: Bill
Gates is a college dropout who d…
We were just about to start our meeting on what next to post when one of our colleague came in with Forefront magazine and showed us this very inspiring story about overcoming problems in life. Here is the content of the story.
As hard as it may be, more problems might actually mean a
closer window of opportunity. There is a saying that every single thing happens
for a reason and whatever does not kill us makes us stronger. A story by Alijo Sylvester.
The story goes like this: A young woman went to meet her mom to tell her about her life
and how things are so hard for her. She was about giving up and had no idea how
she was going to make it. She was fed up of fighting and struggling. She complained
of how after a problem, straight comes another one. Her mom called her to the kitchen. She filled three pots with
water and put them on fire. The first pot, she placed carrot, the second she
placed egg and the third she placed ground coffee bean. She let them boil without saying a word. In abou…