Making an Educated DecisionJeff Gangemi and Francesca Di Meglio
Michael Benlolo, 23, wants to help his family. He's finishing a B.S. with a concentration in entrepreneurship and finance at Babson College in Massachusetts, far from his home in Venezuela, so that he can help his family run Omax, a 30-year-old wholesale-goods business that his father heads. Benlolo came to the U.S., where he says "capitalism is beautiful," to take advantage of the resources that many American B-schools offer to family enterprises.
It's of the utmost importance to Benlolo that he doesn't miss a single chance to turn himself into a leader before graduating in May. "If my father grew something, why should I start from zero?" he asks. "I should take the opportunity to grow his dream even more."
Indeed, nurturing and enhancing the visions of their forefathers is the goal of many young people who inherit family businesses. But not everyone is as convinced as Benlolo that dad's company is the right career path.
Business professors who have researched the topic say that most people born into an already-established business have their doubts at some point, and American youth are the most likely to move away from the family business. In the next five years, 30% of family-owned businesses will experience a change in leadership due to retirement or semi-retirement, according to the University of North Carolina-Asheville Family Business Forum, a networking and education center.
FINDING THE PATH.
Young people who are in line to take over or manage family businesses today are more educated and prepared than previous generations, experts say. About 30% to 40% of Babson's students come from families with established businesses. But this next crop of leaders also faces more challenges, and signing up to work for the family is no longer considered a sacred obligation. Choosing whether to stay or go can be gut-wrenching or satisfying, divisive or unifying. How do you make such a crucial decision about your life and that of your family and business?
For most people, the first step is getting educated. That can mean going to an undergraduate or graduate program to explore your academic interests, seek resources available to family enterprises, and determine how you might fit into your family's company. Or it can mean asking your parents lots of questions about how the business works, what they envision for the future, and what role they would like you to play. Experts say a combination of both is ideal.
Family Business Centers, at places like Babson and Northeastern University, offer networking opportunities for family-business managers to share experiences and advice. Often, these groups tell young people to explore other jobs or goals before signing up for the family business, as a way of determining their likes, dislikes, and outside interests. Some of these centers also offer training specifically for young people trying to determine their future career. The Loyola University Chicago Family Business Center offers workshops to future inheritors of family businesses, who range in age from 6 to 45.
THE RIGHT QUESTIONS.
You're practically never too young to get started. Children learn about selling products and saving money. Teens hone their marketing and product-development skills, and 18- to 25-year-olds focus on self assessment: Who am I? What am I good at? What can I contribute to the family? Adults identify how to have a smooth transition when passing a company from one generation to the next.
Educational opportunities help young people gain clarity. Elise Dabby, a first-year student at Babson, was dead set against joining Danmor Investments, her family's San Diego-based commercial real estate firm -- until she arrived at Babson. Now, she's still unsure about whether it would be the right decision for her, but she's giving it much more consideration than ever before.
Dabby says her classes have helped her to ask the right questions of her father about the business and how it's organized. The conversations they have had sometimes get her really excited about a business she never thought would interest her, Dabby says.
Talking business with superiors isn't always easy, and that's even more true when mom is your boss. At Babson, Tobias Donath, who's now the director of sales and marketing at Backerhaus Veit, his mother's wholesale artisan-bread company in Toronto, learned that he had to negotiate with his family as he would with any other employer. He and his mom, Sabine Veit, received a consultation with his class. Then they created a board of advisers composed of his mother's representatives and his. Together, they determined what his job and salary would be when he graduated.
The discussion got heated at times, he says, but in the end both sides were pleased. And they have big plans for the future: to build a chain of bakery cafes, which was Donath's idea. "The last thing you want to do is rip the family apart for a stupid little business," he adds. The give-and-take -- and the idea that he would be able to make his own mark on the company -- drove Donath to accept his mom's offer.
Going to school when you might want to inherit a business offers many benefits, from developing your skills to giving you legitimacy with nonfamily employees. But, ironically, education is one of the things that can cause friction among the generations. "The younger generation outgrows the business through education," says Ted Clark, executive director of the Center for Family Business at Northeastern University. The younger generation often has higher ambitions, and they gravitate toward titles like doctor and lawyer, adds Clark.
Sometimes, members of the more senior generation, who probably had to make sacrifices to launch the company, feel resentment because they think their children and grandchildren feel entitled. At Harvard Business School, John Davis, faculty chair of Harvard's Families in Business Program, tries to help young people understand that a family business isn't simply yours for the taking because you were born into it.
"We're training you to be a leader, but you're not going to be a leader right away," Davis says. "You need to be a good follower and work your way into leadership." These are the kinds of things you must consider when deciding your future.
Certainly, the fear of looking as though they were fed with a silver spoon weighs on many young people trying to decide their fate. Allan Chasen, 38, entered his family's industrial-supply company 15 years ago, after spending two years elsewhere as a consultant. His respect for his family makes him feel obligated to perform well.
"I had a father and grandfather who were extremely successful," says Chasen, now vice-president of sales. "It can be a lot of pressure. If I didn't know what I was doing and my name was Chasen, that would've been a problem."
KEEPING OPTIONS OPEN.
Feeling like the black sheep, who doesn't belong in the family business, is another obstacle that many young people face. Ask Jessica Berwind, who only joined Berwind Group, her father's Philadelphia-based private investment management company, after 11 years of running an art gallery. She says she had no desire to work in the corporate world, and that her family was surprised when she decided to join them because she was always the "artsy one." But now she's a valued part of the team and wears many hats, including serving as a trustee.
Berwind helped write the family charter, an operating manual for family members, and she offers age-appropriate information about the company to her young daughter and nieces and nephews. She says she wants them to be able to someday make well-informed decisions about whether the Berwind Group is the right place for them. That's also why she encourages her daughter's love of singing. Like an increasing number of parents these days, Berwind wants her daughter's career to be a choice rather than a mandate.