Little is straightforward in family businesses, where the natural interaction of family dynamics and economics together create exceedingly high stakes. In a growing family business, collective purpose can be the driver for impact and long-term success, with values at the center.
Challenges to success and longevity can arise from every direction. Family businesses in their second or older generations face competitive and familial tests different from those their founders faced: increasing numbers of family members have an economic stake as well as varied needs; families seek to make a difference through philanthropy and liquidity of the family business, in whole or in part, offers new opportunities to invest together or to go separate ways.
The creation of a family business also creates the possibility for family involvement beyond a founder’s original execution on an idea. Where most family businesses fail in their early years, a multi-generational operating company has already beaten the odds. Successfully spanning generations means navigating change when change is rarely easy. What worked for a founder—strategy, leadership, capital—can fail if later generations do not work to examine their talent, their risk tolerance, their competitive landscape, in their time. Meanwhile, an aptitude for family business is not genetic. It is cultivated and can be nurtured, with effort from all generations. Competitors don’t care how long a family business has been successful; customers sometimes do care, as long as their needs are met. Family businesses are for creators and can bring great reward, not the least of which is seeing one’s children and grandchildren live their own dreams through it. And when that is not possible, staying together in some way, with assets to deploy productively, can lead to great, collective things.
Each “typical” transition a family business faces—whether succession, leadership or next generation development—must be faced with both head, heart, and all available resources, including talent. Understanding the connective tissue that ties these challenges together, turning them into opportunities for continuity, is critical to sustained financial success and family harmony.
Questions that consulting includes are: what activities the family business should collectively support; how to advance both financial and non-financial family business goals through thoughtful organizational design; how to create cohesion among a family that is often varied in interests and dispersed geographically, where the benefits of a single family business may not be well understood and may have differential appeal. Family business must consistently adapt the methods used to bring all parties involved to the company interest. Consulting can help to develop methods that work for all within the family business.