Entrepreneurs beget entrepreneurs

Commercial heritage helps bring out an entrepreneurial mindset, and the older generation can offer insights and learn about the latest trends

The history of every successful family business starts with an entrepreneur - someone who saw an opportunity and turned it into a profitable venture.

The hard work and creativity of the firm's founder bring prosperity to those close to him or her and leave a legacy for them to preserve.

The most straightforward way to respect the founder's contribution to the family is to ensure that the firm maintains its success for another generation. This can be done by finding a younger relative who has the enthusiasm and capabilities to take over one day. In effect, the new manager steers the ship in the direction set by the founder.

But there is another way to follow in the founder's footsteps. Instead of entering the family business, a member of the next generation might prefer to build his own company and, thereby, realise his own enterprising and risk-taking ambitions. If he succeeds, he will create his own legacy that can stand alongside the main family business.

Our research suggests that commercially minded families are well- placed to create a new generation of business leaders.


ST ILLUSTRATION: CHNG CHOON HIONG

More than 60 per cent of millennial entrepreneurs in Asia (and 67 per cent globally) come from a business-owning family, according to HSBC's Essence Of Enterprise report. Among the most successful entrepreneurs globally, the proportion is even higher at 80 per cent. This shows that a commercial heritage helps bring out an entrepreneurial mindset earlier in life.

When a child of a business- owning family wants to strike out on his own, the challenge for the older generation is to find the best way to nurture an entrepreneurial spirit. In many ways, a family business is well-equipped for such a task as its members already have a wealth of practical commercial experience to share.

Furthermore, the family might be able to provide the initial funding to kick off the new venture.

While children can learn much from their business-owning family members, the direction of learning can also go in the other direction, especially if the older generation is able to see the world through the eyes of the children.

However, there are a number of considerations that need to be addressed. Skills cannot be overlooked and the child will need a sufficient level of work experience to make sure that he can manage his own company.

This could come from a variety of sources - studying and professional qualifications, and a period working in the family business or in another company that could provide the experience most relevant to his future plans.

If the next generation plans to start a business that is related to the main family enterprise, the family can offer a guiding hand by suggesting improvements to a business plan or highlighting potential obstacles to success.

The older generation should also show patience, as it can take time for a child's business to get off the ground. An initial setback does not necessarily mean that a child is not cut out for building a business. Failure can be a learning experience for entrepreneurs and one that makes them more prepared for the next challenge.

While children can learn much from their business-owning family members, the direction of learning can also go in the other direction, especially if the older generation is able to see the world through the eyes of the children.

The business environment has changed dramatically in recent decades as an increasingly interconnected world offers a wealth of new global and online opportunities.

By taking an open-minded approach to a business in a new and unfamiliar industry, the older generation can not only contribute insights based on their own experiences, but also learn about the latest innovations and trends - a good example of how healthy communication between generations can benefit everyone involved. The original family business could, in fact, be inspired to innovate after observing its newer offshoot.

But perhaps the greatest reward in helping the next generation launch their own business is the creation of an entrepreneurial tradition. Every family has its own values, which it strives to realise. By highlighting the qualities associated with setting up and running one's own business - hard work, tenacity and emotional resilience - the members of the family are more likely to succeed, no matter where their career leads them.

•The writer is global head of private wealth solutions at HSBC Private Bank.

A version of this article appeared in the print edition of The Sunday Times on August 28, 2016, with the headline 'Entrepreneurs beget entrepreneurs'. Print Edition | Subscribe