Families are families and, as they grow, sometimes they have a difference of opinion as to which way the business should go. This is not necessarily the end of the family business and may, in fact, seed new growth.
Active Knowledge Question:
Have you structured your business into separate business units, which will allow each to set its own path?
It’s far more common than one may expect that across generations family businesses divide, set new paths, are re-acquired, form alliances and sometimes (unfortunately) never talk to each other again.
As families grow and children enter the family business there will always be competing needs and desires. It is not always possible, nor sensible, to try and force everyone to remain under the one business structure.
The founders, for example, may pass the business over to their children, who in turn form their own families and their children grow up and set their own career paths. Some are in the business and some aren’t, two cousins both want to be the next CEO, one family is far more risk averse than the other – and so the reasons for differing views of the future can emerge.
In some businesses and families, there are workarounds that allow the business to be kept under the one structure. This could be as simple as one group of family members buying out the interests of those who wish to depart. This could also involve a group of cousins setting up the new shareholding structure for the next generation of the business. It doesn’t have to be the one family unit.
In other cases, it makes more sense to simply divide the business and wealth up and allow various families to go their own way. This is quite common where siblings have led the business for their generation and, as their children become working adults, it’s easier to draw a line down the middle.
The goal is always ‘enabling the compounding of wealth from generation to generation while ensuring family unity, individual growth and a sense of contribution’. In whatever form the business is passed over, it should always be geared towards supporting unity, growth and contribution, as these are the foundations of compounding.
The key is always to look to the future and structure your business in a way which supports adaptability and flexibility in control and management. In this way, the options are always there.
An entirely new level of performance.
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All the best in the success of your business,
Richard Shrapnel
