Vivaldi Forum “Business without Borders”:

The survival of the family business depends on successful succession

Successful family businesses make up 80% of the world’s economy, and their survival is impossible without timely planning of ownership transfer and management to the next generation, said Novaston Platform CEO Mia Zečević, who moderated the panel “Second Generation of Serbian Business” at this year’s VIVALDI SPRING FORUM on Mokra Gora. Her interlocutors were Aleksa Šaponjić – Director of Digital Products at Nelt Group, Aleksandar Vratonjić Gligorijević – Marketing Director at Telegroup, and Aleksandar Trifunović from Virdžinija DOO.

“The right to dividends and assets is inherited, while the right to make decisions and managerial benefits are earned. No success is given, especially if it lasts for years. I am an atypical example of the succession model because I did not inherit the family business. I am the third generation of a successful family – grandfather Slavko was the Minister of the Interior in SFRJ, father Žarko was the head of FC Partizan for 30 years, and I was the first in the family to develop a private business. Although you initially receive certain benefits, study abroad, and parental support – you need to persevere, build individuality, credibility, and reputation. After 15 years, I managed to position myself by name and surname in the real estate business, which is not easy at all, especially if you want to develop corporate and international ideas and know-how in the local market”, said Mia Zečević, adding that for women in the Balkans is even harder to prove and position themselves.

Although it is considered that this is the time of “the greatest intergenerational transfer of wealth in history”, it is difficult to inherit the business from founders who often do not want to completely hand over decision-making and business to heirs, said Mia Zečević, referring to a recent example of the richest Europian Bernard Arnault who, at the age of 73, decided not to “retire” yet. A good succession plan is necessary to avoid the relentless statistic that one in three family businesses survives in the second generation, only 10% survive to the third, and 3% survive to the fourth generation.

Speaking about the company Nelt, Aleksa Šaponjić pointed out that there is a rule that the heirs must work for at least two years in another company from the same sector. He learned at McKinsey and PWC what the structure of the company was and it helped him when he started standardizing the work process in the family business.

“I also learned the top-down way of communicating in a system that contributes to efficiency – for example, when the CEO asks you something, it is best to answer directly, and provide an explanation only if you are asked to do so. It is important to be educated and understand the structure of a family company, which consists of family membership, ownership and management. Also, it is important to ensure that the best employees are in a key position in the company, regardless of whether they are part of the family or not”, said Aleksa Šaponjić, who notes that he is not in a position to make decisions since the company decided on professional management.

He added that there is a lot of room for individuality in the family company as his job is to change and improve the business and bring new value. However, he also developed the personal brand Pet Stores, Ambulances and Pharmacies in one place, because that is how he gained the experience of the founder, which, as the second generation, he cannot have.

Aleksandar Vratonjić Gligorijević believes that Telegroup is a good example of a company that has fully professionalized management, which separates ownership and management. There are also examples of people who have progressed from the system to co-owners, which ensures that quality professionals stay in the company and are an example to others. Also, a good model is that employees have a share in the profit, even though they do not have a share in the company.

“The successors are always faced with the question of whether they need to prove themselves to the founder and improve the existing business or create something new. I made most of the decisions in agreement with my family, who guided me, but also supported me to start my start-up in my free time. I see the future in the family business and I already have a co-ownership share of two companies within the system”, says Aleksandar Vratonjić Gligorijević, who is one of the initiators of the TeleGroup Innovation spin-off.

He also mentioned that raising awareness of the importance of succession of ownership and management, 20/40 Club was founded 15 years ago, which brings together about 150 heirs of family businesses from the region, in order to connect them and highlight the specific role of second and third-generation members in further business.

Aleksandar Trifunović is a co-founder of Mars Activewear and a distributor of Nocco, Barebells & Vitamin Well for Serbia. As he says, working in a family company enabled him to gain experience, get to know employees and the way they think. Although he did not have the pressure of his parents to return to the company, he believes that he wouldn’t be making the right decision if he had not used the opportunities of the already developed business.

“In a family business, you have a responsibility not only to the business and the company – you can sell it or shut it down, and then invest in something new – but also to your employees and their families. As large systems take over distribution, this should be considered in the future. For now, we are progressing and developing, but it is up to us, as the second generation, to think about the transformation on time and in accordance with the new trends. I am more focused on using the existing infrastructure and capital for e-commerce, but also for the development of domestic brands”, said Aleksandar Trifunović, who expresses his creativity and individuality as an influencer and Youtuber.

The panelists also referred to the examples of global families that have had a business for centuries, not only for decades. They agree that one of the problems of today’s domestic business is too much trade and not enough new value, as well as that the strength of the foundations for the next “generations of Serbian business” depends on the transition, professionalization, and strategic partnership that the second generation will make.