When the older generation, such as parents who have run a family business for some time, see their children grow up, they naturally wonder, “How should we plan to prepare our descendants to take over the business?” This includes considering the right timing, capabilities, experience, and readiness of the children to carry the family enterprise forward to the next generation.
Family business wealth equals financial wealth plus emotional wealth.
Family Business Wealth = Financial Wealth + Non-Financial (Emotional) Wealth.
A common question that parents always have is what to do next. On one hand, their children have grown up, marking the time to pass on the family business and legacy from generation to generation. On the other hand, there is fear and worry that prevents action, creating a family business trap that is hard to escape. So, what is the solution?
Having consulted with over 50 family businesses—from SMEs to publicly listed family firms in the Stock Exchange of Thailand—and planned succession for many families,
it can be concluded that succession is more about a process of development than natural selection. Therefore, building the Next-Gen can start now with appropriate strategies using a framework called Succession N-Action.
Succession N-Action is a framework for planning family business succession, focusing on practical steps to concretely develop the next generation. It is a balanced process—not too forceful nor too slow—based on a framework for future family business strategy that involves two main dimensions: business risk and family knowledge.
From this framework, managing a family business involves three aspects.
The last aspect is the family business development strategy, which leads the business into unknown and risky future areas with good returns, forming a new growth curve for the business group. Many families have their children work in areas even the family itself does not fully understand or that are risky. When projects do not go as planned, the children are criticized or branded as failures, even though they were never given a chance to learn step-by-step from the ground up.
Managing a family business is not the same as a business development strategy.
If we start anew by integrating family business strategy with developing the next generation, we should begin with the N-Action steps to build skills, accumulate experience, and importantly, build trust between the younger and older generations.
If the younger generation is fresh out of school or has little experience, starting with known and low-risk tasks is appropriate. This is the learning and experience area where they can be taught or practice until they become familiar and confident with company systems before moving on.
As the younger generation gains knowledge and experience, the family can allow them to take on more risky but familiar tasks, such as leading investment projects or expanding production lines or factories under supervision. This provides opportunities to encounter and solve problems with coaching support. At worst, the family can manage crises and use lessons learned to restart without blame.
When the younger generation can manage well and have broader knowledge, they can be assigned to invest in unknown but low-risk areas for the family, such as implementing new online accounting systems or ERP to fully track performance.
These are not business risks, aside from financial investment, since listed companies regularly invest in such systems. So, the risk is only that the family lacks knowledge. When the younger generation succeeds here, it proves they have earned trust to initiate projects the family has not known before.
In the final stage, after proving themselves trustworthy, the younger generation can be placed in critical roles involving unknown and risky ventures for the family business, such as launching new products or services, exporting existing products abroad, or starting new businesses beyond the family’s comfort zone (e.g., moving from OEM manufacturing to having their own brand).
This area is risky; if someone is unprepared or not trusted by the family, they will lack financial support and face resistance, making success unlikely. However, if the trusted individual has experience, good problem-solving skills, leadership, and the family’s trust, then support and delegated authority will be given, greatly increasing the chances of success.
Of course, these principles can be adapted according to the contexts of the older generation, family, and younger generation. For example, one family consulted had a child (named Ms. A) who was a head of business development/project leader at a top-five global FMCG multinational. The family wanted her to return to help the family business.
Accordingly, the family assigned her appropriate roles and responsibilities—not starting at the learning and experience area but based on her qualifications and maturity proven externally. Under the family’s employment rules (family constitution), Ms. A became Sales Director and Operations Director, reporting directly to her father with his team supporting her to set up sales and internal workflow systems.
However, the family was not yet ready to let Ms. A open new markets independently. They required her to work under her father’s supervision for a period to learn company culture and operations and to assess if she earned trust. This arrangement was a win-win solution.
Another example involved a son (named Mr. B), 23 years old, with a finance master’s degree from a prestigious U.S. university. He was smart, graduated quickly, but had no work experience, only degrees and friends interested in startups and fast scaling. Due to COVID-19 in 2020, he and his family decided to return to Thailand for safety, and he joined the family business in finance and accounting, assisting his uncle with financial accuracy.
Within four months, Mr. B noticed the family business’s finances were mismanaged, with business and family funds mixed and two separate accounts (one of which was the family business account). He saw that the family business had over 500 million baht in idle funds. Mr. B, already inclined to start a business, asked the family for 50 million baht to launch a startup with the family as investors. Despite having a business plan, the family did not yet trust him or have a formal succession process, so they declined.
Mr. B’s firm stance caused ongoing disputes at home. He argued that with so much idle money, why not invest in him? The family insisted that the money was a reserve for emergencies to keep cash available if the business struggled.
Eventually, Mr. B became very frustrated, accusing the family of being stingy and protective of the funds, calling the family business annoying and boring because money existed but could not be used. He stopped working in the family business but eventually returned due to COVID-19 job market issues and unsuccessful startup pitches. After receiving consulting, he understood and proved himself, ultimately expanding the family business group.
From these two case studies, it is clear that when a family has a structured succession plan involving the younger generation, everyone understands the starting point, tests, and destination clearly without guessing or unrealistic expectations that cause conflicts. A key prerequisite is having transparent family business rules covering the future, finances, investments, and trust criteria to determine when trust is earned. With such rules, the N-Action succession process becomes straightforward and manageable.
Planning family business succession and preparing the Next-Gen requires suitable strategies and family rules that support the development and growth of the younger generation and the business’s readiness to expand in the future, as well as
the younger generation must understand that