The multigenerational family business model could be set to decline in the Philippines, according to a survey conducted by Sun Life.

Entitled “Future of Family Businesses in Asia,”the research reveals a shifting mindset among first generation business owners in the Philippines,asmore than 65% of younger owners surveyed believe there will be fewer family-owned businesses in the future. Moreover, half of the respondents believethat owners will opt to sell the business rather than pass it on to the next generation.

This sentiment was prevalent in the other Asian countries surveyed, including Indonesia, Hong Kong, Malaysia, Singapore and Vietnam. Young business owners in these countries likewise lacked interest in creating a long-lasting legacy as entrepreneurs.

“Family businesses are the foundation of Asia’s economies. There remain many advantages to running a family business in Asia. But the younger generation of business owners are thinking differently about the future of their business,” said Sun Life AsiaPresident Leo Grepin. “Rather than pass it on to family as has been favored in the past, they prefer to build fast, sell, and retire early.”

Conducted in December 2019, the research was designed to uncover how today’s first generation business owners operate. It looked at their perceptions and attitudes to risk, retirement, and succession planning and the future outlook for the family business model in the next decade. Feedback was collected frommore than 250 family business owners in the Philippines, and 1,300 business owners across the aforementioned Asia markets. They were categorized into startups (0 to 5 years), growth companies (6 to 10 years) and mature companies (over 10 years).

Business vulnerability amid the COVID-19 pandemic

Sun Life’s survey also finds that the COVID-19 pandemic is likely to weaken the competitiveness of younger businesses as they are less prepared for unexpected business challenges and disruption. On the other end, mature business owners have heightened perceptions of the range of risks facing their business and are more likely to use risk mitigation tools to build resilience.

A testament to this is the gap in terms of health and critical illness protection.

As family businesses often rely on a small bench of key decision-makers to run the firm, the health and wellbeing of these leaders is integral to the health of the business.Almost all surveyed business owners in the Philippines (95%) reported that if they, or their key people, suffered an incapacitating illness, it would have a serious impact on their business. Yet, as COVID-19 was first emerging, only 52% of startup and 58% of growth business owners had a personal health insurance protection, while30% of startup and 32% of growth business owners had key man protection.In addition, only 53% of startup and 60% of growth businesses had an employee health and accident insurance program in place.Meanwhile, 76% of mature business owners had personal health insurance in place and 82% had key man insurance protection. Moreover, 86% of them had health and accident insurance in place for their employees.

“The COVID-19 pandemic has created serious challenges for businessesthat further complicates retirement and succession planning,” Grepin said. “While the first priority for business owners is steering their businesses safely through the pandemic, Sun Life encourages business owners not to lose sight of their longer-term plans and to take a holistic view of the range of financial solutions available to offset their risks and protect and strengthen their business and succession plans for generations to come.”

Futureproofing a business

To help Filipino business owners cope with the situation and ensure the continued growth of their businesses, Sun Life Philippines has created Sun Future Proof, a two-pronged program that combines financial education and financial solution specially for business owners.

According to Sun Life of Canada (Philippines), Inc. President Alex Narciso, Sun Future Proof provides business owners with access to experts from various fields to gather insights on business succession, retirement, the digital economy, tax planning, and other relevant topics. “In fact, even before the pandemic occurred, Sun Life has already been mounting financial planning sessions specifically for business owner clients,” Narciso said.

The efforts continued amid the quarantine, where webinars were mounted to help them cope with the current crisis. One of the previous webinars dubbed, “Partner for Business Owners Track,” is available for viewing at http://bit.ly/suntalksonline.

Sun Future Proof will also empower business ownersto create a financial plan with the help of a Sun Life advisor, who has been specially trained to handleboth their business goals and personal goals. “Sun Life Philippines even has a program for its advisorsfocused on family business and wealth advisory,” Narciso said.“This is a first in the local insurance industry.”

With Sun Future Proof, Sun Life Philippines hopes to help business owners rise above the challenges of the pandemic, strengthen their businesses, and look forward to a brighter future. “This may be a challenging time in our history, but this is not a journey that business owners have to go through alone,” Narciso said. “Sun Life is here to help.”