Growth Does Not Guarantee Excellence, Many Small Businesses Need to Stay Small to Maintain Quality

During the conference on the future of family businesses, Ognjen Bagatin from Bagatin Polyclinic spoke about young forces as an added value in business. They started operating 20 years ago, today they have 2 polyclinics, 18 offices, and 55 employees. He stated that they also maintain academies for their employees through which they work on business and personal education once a month.

– Working with my brothers and being the director of the clinic is totally outside the framework of what I thought I would be doing – said Bagatin, adding that not everything went as planned, but those difficulties helped them to toughen up.

He quantified his managerial mistakes at around 5 million kuna, and to prevent others from repeating them, he advised them to hire a good accountant and learn about finances.

– Marketing was also an expensive school for us, and in the medical industry, it is very important to buy quality equipment. My sore spots are also the partnerships from which everyone benefited more than us. The keys to success are vision and long-term thinking, humility and sacrifice, learning and diligence, a team of people who know more than you, family support, faith in your employees, and optimism – Bagatin stated at the Conference, emphasizing the importance of the human resources department.

At the round table titled ‘To Leave the Business to Heirs or to Sell It’, Anđelka Strajher, CEO of Megatrend, Daniel Lenardić from KPMG, Stjepan Šafran, CEO of Metal-product, Srećko Gross, founder of Magdis, Nikola Dujmović, CEO of SPAN, and Nikola Nikšić, co-founder of Kontera discussed. Moderator Slavica Singer from CEPOR stated that employment in our country is now at 53 percent, and it is projected to reach 62 percent in 2020, which is well below the EU average. She emphasized that we cannot afford for any family business to lose employment due to ownership transition.

Strajher explained that in IT, one must constantly think about exit strategies as it is a specific industry, detailing how they sold some parts of the business on time, some too late, and also tried hiring external management which proved unsuccessful. She hopes to decide on an exit strategy within three years, whether to sell the company, find a partner, or leave it to her son. She stated that she would sell the company below market price to one of her employees because she is emotionally attached to it and cannot just look for money.

Dujmović confirmed the volatility of IT, stating that long-term planning is inappropriate as you are always 6 months away from bankruptcy. He lamented that the ownership and management parts of the story are constantly mixed and added that in his company, the greatest capital is knowledge and passion, and without that, it makes no sense to leave the business to children.

Šafran stated that his initial goal was not to create a family business but to create new value.

– I provide opportunities to everyone, but I ask them to delineate business from family relationships – he said, adding that they export 80 percent and that in the past year and a half, they have hired 100 new workers.

– I am proud of the company I built from scratch and that I turned my son from a student into a manager who today leads the company – Gross stated, emphasizing that he has built a knowledge-based company from the beginning and that this is more than half of the company’s advantages, not buildings and machines.

Nikšić advised young people not to shy away from accounting courses at university as it is an extremely important job. He believes that tensions should be reduced and work should be done on the compatibility of older and younger generations.

– Growth does not guarantee excellence, many small businesses need to stay small to maintain quality – Nikšić believes.

Lenardić explained that the thinking of people in Croatian family businesses is shaped by the experience of transition, war, and changes in the regulatory framework, which has its advantages and disadvantages.

– Our companies are extremely resilient, but also resistant to change, which can be problematic – he concluded.