Co-authored with Margaret Wilson
Problems a family business encounters often stem from inherent conflict between its distinct yet overlapping parts (business, family and ownership), as each part has its own set of needs, goals and structures.
Some family businesses respond to this challenge by ignoring the emotional family components. Others disregard rational business processes in favor of family interests.
In our experience, the most successful family businesses develop a balanced approach to family and business by applying the following practices and tools.
As a family expands, maintaining a shared approach becomes more challenging, and requires an even higher level of professionalism. Professionalization is the act of incorporating professional business practices and structures to achieve balance. Examples of professionalization include:
These and similar actions naturally open discussions about the family’s and business’s interests, beginning the process of balancing the two.
Strategic planning is another way to balance business and family priorities. Because strategic planning involves external and internal analysis of the family business, it prompts the organization to look outside its customary way of conducting business.
This helps preserve family traditions, while creating new vision and direction for the future and bringing family and non-family members together. Outcomes of strategic planning include:
Outside perspectives are critical to maintaining family-business balance. Whether through a formal board of directors or the informal use of professional advisors, outsiders provide an invaluable sounding board and are a continual source of new ideas and information.
Beyond lending fresh points of view, those outside the business also add value by challenging conventional practices and facilitating conversations around controversial issues the family may have had trouble discussing.
Concerns over family dynamics and conflict often prevent family businesses from inviting outside perspectives. However, family members soon discover that outsiders are a crucial asset when navigating this difficult territory.
No single tool alone can achieve family-business balance. It takes multiple structures and practices for a family-owned business to overcome the destabilizing forces that get in the way of success for this unique type of organization.
The earlier you can identify and adopt the right combination of approaches for your family business, the sooner you can ensure its longevity.
