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Every fourth major European company
represents a family business

Philosophy of FBN-Ukraine:
what we have gathered for

  • What should you make, so that the company would live longer than the owner?
  • What should you make, so that it would continue to exist successfully, even though I (the owner) retire or fall for anything other than business?
  • I grow up children; I invested heavily in their education, but will they be able to engage in business and to be effective there?

These questions are put to themselves by 95% of business owners in Ukraine. The answers to them could be given by the practice of the Family Business Network International (FBN-I), which is used by the association FBN-Ukraine as well.

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Vladislav Burda,
president of the RedHead Family Corporation,
the initiator of the association of family businesses in Ukraine:

 

 

 

 

– Our mission as a branch of FBN International in Ukraine: we want to create the precedents, when the capital is inherited from generation to generation with the least losses. Only 33% of businesses, according to world statistics, is inherited by the second generation. The idea is to improve this ratio as possible. At least in Ukraine. The biggest economic disruptions occur due to the abruption of the customers’ and supply chains, because of business infrastructural breakage caused by a chaotic unprepared transfer. Our task is to prevent damage, to prevent losses, which may occur by a business transfer. We want to make this process of the asses and values transfer as effective as possible.

If the capital and assets are not destroyed during the transfer (and it goes about hundreds millions of dollars annually in Ukrainian scale), the wealth of the country is also preserved. And If we manage to improve this figure of business transfer to the second generation by at least 10%, it will be a huge contribution to the country.

FBN-Ukraine also works to ensure that there will be no conflict between parents and children. We want to provide that they could work in partnership for a while, so that the children would be able to learn something useful and important from their parents. This is a good base to bring up children. And even if a child does not want to become the parents’ business manager or isn’t able to run the company in a proper way, you can help him to become a professional owner bearing in mind that a business owner is a profession. And that’s what we teach at the FBN-Ukraine events, which is actively discussed and debated by the owners of family companies in our Association.

History of creation

In September 2008, Vladislav Burda attended the summit of FBN International in New Delhi and realized that that was exactly what he had been looking for many years. They gathered the owners from around the world there. The participants considered the best family cases and visited the most interesting family companies of the country. At that time, FBN had 21 chapters (21 branches), and from Eastern Europe, there was only one, namely in Bulgaria. There was none from the CIS. Vladislav Burda addressed to the headquarters of the Association with a letter, prepared a business plan for the development of a new chapter and in February 2009 he received the approval of FBN International for the creation of Ukrainian Association. “When is your first event scheduled?”, they asked in a letter that came from Switzerland.

The first event

On August 7, 2009, the event was held. 12 families gathered in Odessa office of the corporation RedHead (then it was called “Europroduct”). A lecture on the family business was made by Vladislav Burda. The guest of the meeting was a representative of FBN International, who came to congratulate the Ukrainians and explain how one can develop the community of owners of family businesses. The host of the meeting (the company that takes the participants and share its own experience) was the company “Guliev’s Wines.” Robert Guliyev arranged a wine tasting at the factory and told how he cooperated with the son in business development. The participants managed to take the yoga classes and conduct a mini-tennis tournament. It was a very unusual event, which set a precedent – the business people had never communicated that way before.

What has happened since then

 

FBN-Ukraine has significantly expanded, now there are more than 40 families in the organization. The events that take place three times a year, gather 60-70 people. We built the educational and communication platform where business owners and their families learn to meet and communicate with each other. We managed to create an open community of people who hadn’t had equal circle of contacts before. The FBN members got an easy access to the first persons of various companies. We found the standard format of the meetings: one or more speakers, the host with his business experience, the discussion on a commonly important issue and the sports and entertainment program. We were able to run the programs for the second generation (NextGen) and some special programs for the youngest (Junior Gen).

What’s next?

 

We are constantly experimenting. Besides the basic association’s cities (Odessa, Kiev, Dnepropetrovsk), we began to explore some other areas. We have already visited Cherkassy, Lviv. We held several international events and are preparing for the next ones. Also we tried a new format – a moderation of the internal generations’ discussion: we want to hear each other better. The attendance of our FBN-summits increased, our delegations (8-10 people) are larger than those from the other Eastern Europe chapters. We will develop the master classes on family business issues.

Portrait of a typical Association member

 

This is an entrepreneur who has not lost interest in the business. He wants to learn and develop his business. He sees his business heirs in his children; he wants to develop and cooperate with them, he needs new educational technologies. And he has a desire to contribute to the society; he has certain social makings.

Management structure of the Association

 

The association is headed by the President – Vladislav Burda. The projects related to the second generation of owners are carried on by the leader of NextGen Alexander Mikhailenko. The Assistant President Vladimir Domanin is responsible for communication with the participants and the services for them. The Council is engaged in planning of FBN activities and includes, in addition to the listed people, Michael Weisberg, Katherine Ostapchuk and Nikolay Glukhov.

Media resources of FBN-Ukraine

The Association runs a site fbn.ua, which highlights our news and posts materials for FBN members. For the operative communication, we use the page in Facebook. The magazine FBN News is issued three times a year. In the magazine, you can read about the most essential in the businesses of association members, have a look at the report from the next event, read the materials devoted to the development of family businesses, and place the ads.

Who can become a member
and how you can do it

 

A member of FBN-Ukraine is open to any owner or co-owner of a private company who shares our mission and values, for whom this business is the primary one and who is not a minority owner. To join the association, you need to fill out a questionnaire, which will be considered and approved by the Council of FBN, and pay the entrance fee, as well as an annual one. FBN-Ukraine member automatically becomes a member of FBN International.
Requirements for the business of association members: five years in the market for trading and manufacturing companies, the annual turnover – $ 10 million, the number of employees – 70 people. For companies from other industries the criteria are discussed separately. The candidates for members of the association may attend an event and take part in all the activities of FBN-Ukraine as guests.

Why should a business owner join
the Association of owners of family
companies FBN-Ukraine?

If I want to help my children to cope with the burden of responsibility
for the future ownership of my business assets.

Children feel this responsibility but they cannot yet in a position to estimate it.

In the FBN-Ukraine, we immerse them in the communication with peers – the same future heirs of other businesses. Here one can realize the attitude to the issue of the others; how to prepare for this in the best way, what stages those who are a little older had to go through. Here it is possible to share the family experience.

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To hear other owners.

To understand their philosophy, to assess their personality and values, learn about their views on business; find out, what approaches they use in business management, to training themselves, their children, and the top managers. This exchange of experience allows the owner to come out of the isolation, in which he is constantly fighting for the development and sustainability of his businesses.

3

In order to acquire the friends of a certain circle and level,
to renew your business contacts and companionship.

4

If it is important for me to allow goal-oriented time for my family.

Two days of FBN-Ukraine event is the time that you allow for your family, when you give a sign to your kins that the family is important to you. There are no many places you can go with your family to learn something and to discuss it together. This is not a trip to the resort with the family, where everyone sits alone with his gadget. Here, the total involvement and the ability to be active prevail.

5

To see and hear the most interesting speakers

and to be at the forefront of the knowledge and practices in management and ownership of the business, to have the access to the wisdom of the best gurus on business development and improvement of relations in the family.

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If I want to get a chance to present my company’s case to 40 other owners.

To show the company to other business owners with the other life and business experience, to get feedback from them, to find partners and new customers. To rethink the own business looking at him through the eyes of the other owners.

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In order to give children the opportunity to gain
practical experience in other family companies.

To select the industry, country, company and the business owners where you could send a child safely and usefully for probation, which a special program will be worked out for.

Family business Non-family business
Goal Succession Increase in short-term stock prices
Task Preserve the values and the reputation of the family Meet the investor’s expectations
Fundamental belief First priority is to maintain business More risk – better capitalization
Strategic orientation Adaptation Constant growth
Fundamentals of management Longstanding improvement Innovations
Most important stakeholders Customers and employees Shareholders and management
How business is viewed As a social institution As liquid assets
Type of leadership Servant leadership Personal charisma

Distinctive features of family
and non-family business:

Family business, besides the usual problems of management, marketing, production and competition on markets, faced with such specific issues as education of the next generation of owners, management of business and family, questions of inheritance.

More than half of all working people in the European countries are involved in family business.

Common features of family companies

• The founders usually want to leave a legacy and ensure that the company will successfully develop after their withdrawal from business.
• Founders’ spouses usually wish to see harmony in the family.
• Family members who are not the owners and are not involved in the management (spouses, children, grandchildren) feel that they can influence on the issues related to the business. They can be informally involved in the control over the family business.
• Parents tend to establish an equal treatment for their children. The views on the equality influence on the decision about who will manage and own the company and who will receive the remaining assets.

We know that it can be difficult to run a family business. We know that strangers can hardly realize it. But we also know that if you think about the obligations to subsequent generations, it can bring the immense personal satisfaction.