“Family Constitution” is the key to business sustainability

For family businesses to grow sustainably, a "family constitution" must be established to prevent conflict from the start and maintain family relationships as the ultimate goal. We also recommend ways to strengthen family business defenses to cope with the transition to the digital age and ensure smooth and transparent asset management from generation to generation.

On September 19, 2568, Dr. Niti Nueangjamnong, Senior Director of Wealth Planning and Family Office at Siam Commercial Bank Public Company Limited, spoke at the seminar “Unveiling a New Chapter: GEN3 – Continuing Sustainable Businesses,” organized by the Money & Banking Journal, on the topic of Succession Planning: The Key to Professionally Expanding Family Businesses. He stated that the success of a business hinges on restructuring the family business. Many families want their children and grandchildren to continue the family business to ensure its sustainability.

Therefore, there must be a family constitution, rules written to prevent and manage conflict. Therefore, there must be mechanisms and systems specifically designed to manage conflict when it comes to preserving family relationships and reputations. This is the ultimate goal of resolving conflicts, not deciding who is right or wrong, but finding a solution acceptable to all parties to preserve family relationships. After all, the conflicting parties will continue to be family members.

Having these mechanisms is an important part of family planning. They should be implemented from the beginning, before there is any conflict, so that all parties can agree in advance on what mechanisms will be used to handle conflicts in the future.

However, if family conflicts persist before reaching a compromise, it may be too late. When emotions override reason, finding a mutual solution becomes even more difficult. Therefore, planning today creates a protective shield for families to effectively and sustainably cope with future problems.

Dr. Niti stated that a family constitution has no legal effect. It is up to family members to establish rules and regulations. As a result, the overall family will have specific requirements regarding work or vision, setting intentions, goals, business philosophy, and resolving problems among family members. This requires time to refine and crystallize ideas across all dimensions, from family background, culture, values, and long-held beliefs.

"Involving family members is crucial. Not only does it reduce conflict and encourage siblings to share ideas and create mutual benefits, but the primary goal remains managing the family's assets to build wealth and pass on the family business from generation to generation," said Dr. Niti.

Dr. Niti stated that family businesses face challenges in transitioning to successors, particularly in terms of restructuring within the family. This includes internal structures, which require organizational restructuring, and transparent financial management with family members.

Adapting to a new business: Traditional businesses may need to explore new opportunities or diversify their business lines to increase diversity. Transitioning to a new business requires careful preparation by family members.

Moreover, listing a business on the stock exchange represents another growth opportunity, boosting credibility and attracting new investors.

A common problem in managing family businesses is communication. Many families lack open and honest communication, especially regarding heir involvement and the allocation of benefits. This leads to ambiguity in the distribution of profits, returns, and management authority. Furthermore, many businesses may not yet have the infrastructure to support new technologies such as AI and digital transformation in the digital age.

“Family businesses are the cornerstone of the Thai economy. With proper planning and adaptation, these businesses have the potential to grow strongly and attract significant investor interest,” said Dr. Niti.

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Topic: The Successor: Sustaining Family Legacy Episode 2
Opening a new chapter in GEN 3, continuing sustainable business