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Family Business Topics

The Nature and Challenges of Family Businesses

“I’ve been fired twice by my father”

- The first statement a client shared with me

The statement: “I’ve been fired twice” may support the impression that family businesses are difficult. More so, it substantiates that “the issues impacting a family business are more family related than business related”.

Advantages of Family Businesses

Family businesses are unique, with no argument; and there are significant competitive advantages that family businesses have over non-family business: Some of the chief ones are:

  • An inherent quality of loyalty within a family and trust by customers

  • Greater stability and resilience

  • A long-term perspective

  • Children learning the business and family values at the dinner table

  • The transference of this business and industrial knowledge across generations

  • A faster response to innovation

  • The creation of family wealth and a legacy

Complexities within Family Businesses

While family businesses have a recognized competitive advantage over non-family businesses, sustaining a family business requires different perspective than a non-family business. Family business - over other businesses - have an added complexity of leading two systems with entirely different cultures: the family and the business.

Leadership Needs in a Family Business

The complexities require a leadership with a greater capacity and agility – greater capacity meaning the ability to be more self-aware, cultivate deeper empathy, frame complex issues more effectively for the family as well all stakeholders of the family and the business, and the effort to create value within each.

Leadership also requires stepping back from inherent family systems, be it your ego, your family, or your business, and to see these systems from a more objective perspective – the parts that are working and the parts that are not.

The Relationships

Likewise, inherent in family businesses, families have permanent relationships, while in businesses the relationships are temporary. In families there's unconditional love, and in businesses a conditional approval. Family roles are based on relationships with the goal of maintaining harmony, and in business, responsibilities are on value with a goal of productivity.

Best Management Practices (BMPs) of Multi-Generational Family Businesses

A major cause of the failure in family businesses – especially in the first few generations - is not knowing or not exercising well established Best Management Practices  of multigenerational family businesses, for example:

  • A climate of openness, trust and communication within the family

  • A clear, compelling family purpose and direction

  • Development of next-generation leaders for the family and the business from an early age

  • Strategic planning for family wealth, enterprise development, and individual family members, working in the business or not

  • An exit strategy for the current head of the business that includes his/her subsequent role in the family and the business

  • Professionalization of the business

  • Leadership roles in the business based on merit rather than family membership … being promoted for one’s capabilities rather than family name


“Building a family business that continues across generations takes ongoing dialogue about their vision for the company and the family.”

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