by Vaso N. Charitopoulou

For centuries, the backbone of the Greek economy has been small and medium-sized (SME) family enterprises. Children received early training in the tasks of the family business, while the orientation of their studies usually served business purposes. Today, the role of SMEs is still crucial, since an overwhelming proportion of Greek enterprises (exceeding 80%) remains small and medium-sized family enterprises.

Like any type of business, current family businesses face numerous new challenges of the modern era.  These include the maintenance of sustainability, finding measures to increase profitability, cash flow management, the need for networking, extroversion and innovation.  But what makes SMEs unique is the identification of the business to family, since the family is the business…

Since it has always been difficult and often even impossible for individuals in SMEs to separate family ties from the employment relationship, confusion often arises that leads to conflict.

There is usually not even a clear definition of financial rewards for the various roles of business associates or of the economic rights that a member has when he/she retires.  Therefore, conflicts are inevitable.

Situations become even more complex when the family business is confronted with the overlap and conflict of demanding modern roles and responsibilities among family members, whether it is with new members in the family (through marriage), or with the most obvious necessity for a modern family association.

In addition, each family business in Greece has its own ownership structure.  The business can belong and be managed entirely by the family; be partly run by the family but belong entirely to it, or be partially owned by the family, but get managed exclusively by it.

All these become even more critical when it’s time for succession. Succession is a landmark event in any type of business, but in the case of family businesses, this can be even more important. This is because the goal of the business founder, which is the transfer of the business to the next generation, can be undermined both by the interests of the family at the time of succession, and by the lack of planning and strategy regarding the succession process.

This is a decisive moment for the subsequent viability of the family business.  More often than not, it is a painful and emotionally charged process, because it marks the end of a period and the beginning of a new one. It should be therefore be understood by the Greek family business owners that the succession is an extremely delicate and long process involving three phases: the initial transfer of the founder’s business interests and values; the transfer of leadership of the enterprise; and finally, the transfer of property.  The succession in the family business is not and can not be seen as a simple matter of “sharing” of property among heirs or as a natural evolution of the family business.

The fact is that successful Greek family businesses survived for generations based on family councils. It is with this model that younger businesses should move forward. With two generations, the former and the next, working together on the vision to perpetuate the family business tradition and with the common objective to transfer its values. On the other hand, the future successors to the Greek SMEs should show authentic love for the family tradition and commitment to the vision of its continuation.

Furthermore, what is required in a modern socio-economic environment is the adoption of new, more participative, less hierarchical and more flexible ways of management and leadership in the framework of a global economy, where international collaborations and networks create a fascinating world of challenges!