It’s all relative: the four keys to family business longevity
Surprisingly few company founders take the time to plan ahead when handing over the reins to the next generation. Here’s why it’s worth the trouble
More than 110 years ago, Fung Pak-liu, an English teacher, and Li To-ming, a local merchant whose family owned a porcelain shop, started an export trading company in Guangzhou, shipping porcelain, fireworks, jade handicrafts and silk, mainly to the United States.
In 1937, Fung’s son had a dream to transform the tiny export company into a world class player. To fulfil his dream, Fung Hon-chu opened the company’s first branch office in Hong Kong, then a fast-growing port city and financial centre that offered him the opportunity to be much closer to his global customers.
Three years after his co-founder died in 1943, Li sold his 300 shares in Li & Fung to the second-generation leader. Since then, the Fung family have steadily built the company into one of the world’s largest global supply chain firms, while at the same time contributing to the spectacular development of Hong Kong.
Owner-managers often avoid long-term planning because the process can touch upon some pretty hard questions that require quiet periods of reflection
For long-lasting, successful firms such as Li & Fung, the role that founders play is critical to the longevity and leadership of the family and business. Without visionaries, their companies and successors can falter for lack of direction. And yet many owner-managers focus their attention on short-term goals instead of thinking long-term.
If asked why, many founders might argue that there is not enough time in the day to complete even the day-to-day jobs, much less tomorrow’s tasks. In reality, these owner-managers often avoid long-term planning because the process can touch upon some pretty hard questions that require quiet periods of reflection.
Research shows that two out of every five founders who expect to retire within two years have, surprisingly, not put any long-term plans in place. And yet these same founders are still as vulnerable to shocks from unforeseen hospitalisation or unexpected departure from this world as those founders who do make plans.
In fact, it is well documented that firms with long-term planning in place are in a much better position to withstand the health shocks of their founders than those firms without.