Gelisim News

85% of family company ventures disappear within the first 5 years!

The Academic Member Dr. Hüseyin Öcal of the Istanbul Gelisim University having emphasized that 85 % of the newly established family company ventures disappeared from the scene in the period of their first 5 years indicated the most frequent cause in the short lives of the family companies, observed thereunder, has been that the new generation was not educated and trained within the framework of a proper plan.

The family companies taking up substantial roles on the free economy employ 75 % of the population working worldwide. The researches, made in this respect, bring forth the fact that 95 % of the enterprises in our country are affiliated to the family companies. Ok then, what are the problems that the family companies experience in the transfer of the family companies into future generations?

The Academic Member Dr. Hüseyin Öcal of the Department of Business Management of the Faculty of Economics, Administrative and Social Sciences of the Istanbul Gelisim University having emphasized that 85 % of newly established family company ventures disappeared from the scene in the period of their first 5 years said: ‘’If the policy-makers throughout the world want to cope with high employment as a consequence of the global crisis, it will substantially be beneficial to approach the family companies with due importance and put into application the incentives that will facilitate and provide the family companies with opportunities of making investment.’’  

THIS IS THE CAUSE LYING UNDER THE FAILURE OF FAMILY COMPANIES

While the wish and request to protect the name and reputation of the family turn into more quality product and service, this matter make a positive contribution to the investment proceedings. The Academic Member Dr. Hüseyin Öcal, who mentioned that the conduct of both the company management and ownership of the same provide various numbers of advantages, however, relevant problems were experienced while the same is transmitted to the following generations, further said: ‘’There may be hundreds of causes for the failure of a company in its activities; however, the cause, witnessed at most in the failure of family companies and their short-lives, is the failure of training/educating the new generation within the framework of a plan and of the transfer of the management to a new generation in a timely manner. If the objective of the family company is to live long years, it will be necessary to plan the manager development plan of the new generation and put the same into application.’’

‘‘IT IS NECESSARY FOR THEM TO EMPLOY PROFESSIONAL MANAGERS OUT OF THE FAMILY’’

Another important matter for the family companies in order to catch a long-term success is, however, the family-member managers and employees, who are unsuccessful and fail to carry out their works and duties properly. Mr. Öcal, who emphasized that it was necessary for them to employ professional managers, who are skilful and talented and will create added value, outside the family, further added that putting the encouraging methods that may ensure the participation of such managers into application at the company and prevent their departure from the company has been significantly important in respect of institutionalization.