The Gaisano family is one of the pioneers in the retail industry in the Philippines.
The Gaisanos started their retailing business in 1949 when Doña Modesta Gaisano, together with her five sons, established the White Gold Department Store in Cebu City. It was considered a high-end department store at that time selling mostly luxury products.
When the Gaisano matriarch died in 1981, the five sons agreed to divide the estate so they can pursue their own business interests. Victor Gaisano, the second youngest son of Doña Modesta, received a property in Colon, Cebu as his share in the estate.
Banking on his retail experience, Victor, with his wife Sally, decided to build his own department store, known then as Metro Gaisano, on the Colon property. Instead of selling imported products similar to his family business, he focused on positioning his department store to the mass market by selling locally manufactured products.
The change in market strategy successfully transformed Metro Gaisano as a major player in the retailing landscape. Today, the Metro Retail Stores Group has over 45 multi-retail stores located in key cities in Visayas, Luzon and Metro Manila.
Thirty-five years after Victor Gaisano founded the Metro group, the second-generation Gaisano children—Margaret, Jack, Edward and Frank—are now taking charge of the family business. How did the Gaisano patriarch prepare his children to carry on his business legacy? How do the Gaisano siblings ensure that the family business will last beyond the third generation?
Here are the five lessons every entrepreneur can learn about family business succession from Metro Retail Stores Group Chairman and CEO, Frank Gaisano:
1. Train your children early in the business
When Victor Gaisano put up Metro Gaisano in 1982, he asked his children to help him build the business from scratch. The Gaisano siblings were very involved in the family business while they were still in college.
“When I was still in school, I was already working part-time for the family business. When my father put up his own department store, I already had experience in houseware and supermarket. By the age of 20, I was already supermarket manager and at the same time doing merchandising and store planning,” Frank Gaisano told this writer.
All the Gaisano siblings graduated from college and are licensed professionals. Margaret is a certified public accountant. Jack is a chemical engineer while Edward is a Doctor of Medicine. Frank, the youngest among the siblings, is a Chemical Engineer. Despite their various educational backgrounds, all of them were trained to be in the retail business.
“I was in merchandising together with my brother Jack and Edward. My sister handled the accounting while my dad provided the guidance,” Gaisano added.
2. Pass on the vision and instill business values
Having a clear vision on where the business will go helps drive the company to achieve a common goal. When Victor Gaisano positioned his department store to cater to the mass market, his vision of the future of the business was very clear.
“The vision was provided by my father on day one before he delegated to us the tasks of running the business,” Gaisano recalled.
The Gaisano patriarch also demonstrated to the siblings the importance of making a business decision and taking risks.
“Just imagine the guts of my dad,” Gaisano added. “When we started we were not even the biggest. There were seven other competitors at that time and we were just one of the players. He was very daring.”
3. Develop multiple revenue streams to diversify
Creating new sources of revenues from other industries can help protect the business legacy from tough times in case of slowdown due to rising competition. Diversifying into other businesses can help provide more options for growth in the future.
The Gaisano group follows the three pillars that support their business. The core pillar is the retail business, which is supported by real estate and financial services.
The group has several property projects with different developers. For example, they have a joint venture project with Hongkong Land where they are currently doing a waterfront township project in Cebu. For financial services, on the other hand, they also have their own bank called Wealth Bank, which is a joint venture with one of the largest banks in South Korea.
4. Develop company culture aligned to core beliefs
“Our preference is to develop people from within, but sometimes we are never fast enough to develop those skills,” Gaisano said. “We are also open to hiring outside. It’s good to have cross-pollination between tapping from the outside and growing your own talents.”
Many companies commit the mistake of hiring people for their skills alone without considering how they view the company’s unique way of operating and managing the business.
“Culturally, they must fit. They have to at least align with our culture. Some people may be very good in what they do but culturally they may destroy your organization,” he added.
5. Professionalize the family business to ensure longevity
One way to ensure that professionalizing the family business can bring better governance is by going public.
“We believe that going public was not just to raise capital but we were looking for governance. By becoming public, we are not only measured by our families but also by the public,” Gaisano explained.
“You will be surprised how much we have learned from the analysts. It is good to have this scrutiny to make us perform better. It gives us the pressure to deliver to make sure that every month our metric is getting better,” he added.
Henry Ong, RFP, is president of Business Sense Financial Advisors. Email Henry for business advice firstname.lastname@example.org or follow him on Twitter @henryong888