Managing Family owned business/corporation

Every generation needs a revolution - an entrepreneurial revolution

Rizal Philippines
February 13, 2017


From IFC - Family Business Governance Handdbook

Corporate Governance in Family Business

This coming Wednesday, I will be meeting a Board regarding questions on propriety correct way of investment by family members.  I and a lawyer will be consulted on the fairness on investment and dividends of family members on the business.

The laws of the land, the civil code, the family code, the Corporation code cant answer the query;  even management  and MBA stuff cant answer that.

Managing a family owned business is a challenge;  managing family relations and managing the business

They say that the first generation builds and grows the business, the 2nd generation enjoys it, the third generation, the nephews and grand children ruins it.

A/  There should be three governing bodies of  a family owned business each with varying compositions:

1.  Family council  -  to create and enforce Family constitution which contains

           1.  Family constitution  -   enlarging perpetuating the vision mission
                         1.  family members employment
                         2.  share holding

          2.  Family corporation institution

                        1. family assembly
                        2.  family council
                        3.  family office

2.  The statutory board  - to do the regular board meeting responsibility

3   The strategic board plan the future or the company to keep up with the times, and fend off competition


B.  FAT principle and corporate governance

     Fairness
     Accountability
     Transparency

C.  Succession Planning

Lawyers, judges cant solve the problems of family owned corporation although they are so many may be up to 80% of the total business in the country.  Many of them fall by the wayseide because solutions to their problems, mostly about family relations can be solved by the family members  themselves.  That is why Nene Soriano, Ricky Mercado (under the new Dept at Loyola on Family business) are having a great day consulting family owned business. So too Dr. Ed Morato who bills $2,000 per day





       

Adversities in the Life of an Entrepreneur - Power and Credit Grab

Every generation needs a revolution - an entrepreneurial revolution

Rizal Philippines
December 30, 2016

Today we commemorate the nth death anniversary of who is considered the national hero - Dr. Jose Rizal. His death by firing squad is the greatest adversity a person can meet in his life.

This makes me recall the adversities in the life of a business leader/entrepreneur.  They are the major ones but there are more.

1.  A business partner tells of the sons and daughter of his siblings (whose parents his brods and sis have died) Since they are taking over the shares of his siblings, the different breed have tried to oust him out of the picture.  As of now he represents the corporation in the joint project agreement.   I said that is most unwelcome, since we formed this joint project;  the children had nothing to do with the project.  All they have now are rights of the heirs and their actions are destructive to the unity of their group.

2.  A friend who has a successful party needs business (he has a venue, chairs and tables rental, party packages) put up  burger business. He gave this to his children.   He is making suggestions on how to improve the business.  And he being senior is being set aside.

3. In the companies which I set up so that my brods and sis will not be poor just like the rest of our clan, I was ousted under  Sec. 28 of the CC,  after implementing a bequeath of the estate (equal sharing) the younger ones voted together to remove me from the company which I established. I have not gotten a single cent yet from those companies including a crematorium where I invested wholly my savings.

Thus the seminars and courses of this school on managing conflicts and family business are flourishing.   In a major food company which sells billions, the family feud is intense as I facilitated the presentations of departmental strategies.

There is a group that facilitates formation of family council at a fantastic rate of only $2,000 per day.  That is a great rate if we consider the problem and the friction that it tries to remove from the operations of the family business

The Family feud, Dallas, Falcon Crest are all about this intrigues, power grabs, conflicts in family business