How to Handle Business Succession

Aug 22, 2021
How to Handle Business Succession

Receiving the torch from your parents for their restaurant business sounds like a good thing. However, many business successions are mired with the biggest problems and even conflicts that cause family problems. That’s because the parents reject the changes that their children want to apply, while the children think that the things that parents do are ancient and must be changed! When parents give their business to their children, they forbid any sort of changes, so many children end up either leaving to run a restaurant in their own style or they put up with it and feel unhappy, making it impossible to further develop the business. A classic example is when parents and children argue over restaurant renovations. The children see that branding and finding new points of sales and marketing are necessary, but parents take that as their kids destroying the things that the parents built. Disputes can also occur in setting up the restaurant’s system or when adopting technologies such as POS devices. The children see these things as necessary to make it easier to manage the restaurant, whether in terms of cost or stock control, whereas the parents see these things as unnecessary and wasteful. So how can people who receive businesses from their parents handle these situations to ensure smooth transitions, prevent intergenerational conflicts and avoid disruption in business improvements? We offer you some lessons from children who successfully succeeded their parents’ businesses by combining intergenerational ideals so effectively that their businesses survived.

4 Secrets for Succeeding Parents’ Businesses for Success

  1. Value the things done by the older generation.
One of the biggest problems during business succession is the younger generation not valuing old things and thinking that they have to change. Such as in the case of Bua Loi Klom Kliao By Mae Kaew Shop, the children thought they had to change the 20-baht-per-bag Bua Loi that their parents sold in order to make Bua Loi By Mae Kaew known and sell well. Ms. Papassapan Cheeranarawanich, as part of the younger generation, thought that using plastic cups rather than bags made the packaging look better and that raising price was a good idea. However, her parents disapproved, and conflict ensued within the family. Eventually, she was reminded by her father’s words: “Wasn’t it Bua Loi in bags that sent you through school and provided for the family?” As a result, Ms. Papassapan realized that changing the packaging was not the main issue of the dispute, but that it was because she had overlooked the value of what her parents had done, and that she tried to change in an instant something that they had been doing for decades. Naturally, doing that would cause misunderstandings. Therefore, Ms. Papassapan looked for a location inside a market to open a small shop and asked her parents to experiment her format without changing what her parents were doing. This family conflict then ended, and she got to try out what she wanted to find out for herself whether her ideas were effective.

2. Prove your determination and don’t rush to change everything as you please.
Many children want to change everything when they are handed their parent’s businesses. But this is difficult. Don’t forget that the source of the money you use for making any changes is your parents. Especially if you don’t have experience, don’t rush to change anything. That’s because lack of confidence and uncertainty cause parents to feel reluctant to fully let go, as they don’t know how serious their children are about their businesses, especially if their children are recent graduates or just finished school. Hence, prove yourself by appearing reliable in the eyes of your parents by keeping the business the way it is for just awhile… It’s necessary to prove your determination.

For example, Mr. Chaipipat Thabtiang had to succeed his parents in running the Go Dam Muen Ram Restaurant. He had ideas and wanted to renovate the restaurant in a new style for the younger generation and create an identity in both image and menu items in order to be able to compete with other restaurants. However, before he realized his ideas, he had to fight tooth and nail and put up with a lot in trying to get his family to give him permission to improve his restaurant. He had to do his homework and gather all sorts of information to present to his parents to get them to recognize the benefits of changing the restaurant’s appearance and, importantly, prove to the family, so they would have confidence in the things he wanted to do and what his future would be like.

3. Don’t overlook the experience of parents; do involve them in every change that takes place.
Another cause for conflict between parents and children are the fact that children often think that their parents are outdated, couldn’t keep with the times and don’t understand changes. As a result, they frequently cut their parents out of their businesses and take the torch without thinking about the invaluable experience of their parents. Frequently, the difficult problems that children face are easily resolved by the parents, because they have had prior experience. Importantly, in every change that children want to make, parents should be allowed to know about and participate in giving their opinions. Don’t forget that they’re the ones who build the businesses. They know more than you do, and you share ties with them. Trying to remove parents from the system is definitely not a good thing. Don’t forget that even though your business is yours, much of the capital still comes from the parents.

4. Compromise is at the heart of passing business on from one generation to the next.
Finally, the heart of business succession is compromise. Don’t just put your desires above everything else. Don’t forget that your parents have to go through a lot of difficulty in order to be able to pass on their business to you and that it’s only natural for your parents to feel concerned in the changes that their child wants to make. See value in the things that your parents have done and gradually change little by little in order to prove to them how good your changes are. And involving your parents in expressing their opinions is a compromise that will make it possible for you to be able to continue developing the business. No matter what, every parent wants to see their child succeed. Parents will be especially happy in children’s success in the businesses that they’ve built. That’s because it’s the intention of the parents to have their children takeover the business, and they would like to see their children prosper even more than them in the past. If children could understand the concerns and anxieties of the parents, business succession will surely take place smoothly without disruption.

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