Building a company that outlives its founder

Many of Vietnam's successful private companies were built within the last thirty years by determined founders, often with the help of their families. That energy is remarkable. A recent PwC survey found that three quarters of the Vietnamese family businesses it spoke to had grown their sales in the previous year, well above the global average. The same founders now face a question that European family firms have faced for generations: how does the company continue when the next generation takes over, or when some of the children would rather not?

Structures that protect relationships

The PwC survey also suggests that formal arrangements are still rare in Vietnam. Only a small share of the Vietnamese respondents had a family constitution, a written agreement about how the family relates to the business, compared with around a quarter worldwide. The sample was small, so these figures are indicative rather than precise, but the pattern will be familiar to many readers.

In Europe, such documents are common among long-established family firms. They are not about distrust. They are about deciding calmly, while everyone gets along, questions that are painful to settle in a crisis: who may work in the company, how shareholders are paid, how disagreements are resolved, and how the next leader is chosen.

Planning well ahead

Germany's development bank KfW estimates that around 109,000 small and medium-sized firms a year will look for a successor up to 2029, while a similar number plan to close, often because no successor is available. Its research shows that businesses which plan early have more options. Succession is not an event; it is a process that can take many years.

Merit and independent advice

Economists who have compared management quality across thousands of companies worldwide found that family firms where leadership is simply handed to the eldest son tend to score lower on management practices, while family-owned firms run by professional managers often score well. The lesson is not that family firms are weaker. It is that choosing leaders on ability, and inviting some independent voices to the table, protects what the family has built.

In practice, that can be as simple as an advisory board with one or two experienced outsiders, clear job descriptions for family members, and a written plan for the next ten years. None of this reduces the family's control. It strengthens it.

When the children choose another path

In many Vietnamese families, parents built the business with long days on the factory floor so that their children could study and have more choice. It is hardly surprising that some of those children now choose that choice: an office career, a profession of their own, a creative passion, or a life abroad. Running a factory, a construction firm or a trading company is demanding work, and not everyone wants it.

This is not a failure of the family, and it need not be the end of the company. Owning a business and running it are two different roles. Many European family firms have been owned by the same family for generations while being managed, for long periods, by professional managers from outside. The family sits on the board, sets the direction and shares in the profits; an experienced management team runs the daily work.

It is also worth looking a little wider than your own children. Sometimes the right person is already close by: a nephew, a niece or a younger cousin who has quietly worked in the business for years, knows the customers and the machines, and cares about the company. Such people are easily overlooked because they do not speak up, or because they are not the founder's own sons or daughters. Giving them real responsibility, fair training and a clear chance to prove themselves can keep the business in the family's hands and bring out talent that was there all along. The same rules should apply to them as to anyone else: merit, a transparent path and fair pay.

There are other paths too. Loyal senior employees may be able to buy part or all of the company over time. A trusted partner or larger firm in the same industry may be a good new owner. One child may lead while siblings remain shareholders. Each path works better when it is prepared calmly, years in advance, rather than decided in a hurry.

What helps most is an honest conversation. Children are more likely to stay involved, as owners or advisers, if their own ambitions are respected rather than overruled. And a business that no longer depends on one person, with a capable second line of management and clear records, keeps its value whichever path the family chooses.