Family Businesses

There may be nothing in this world that can approach the complexity of the passing of a family business from one generation to another or among family members of the same generation.

To be successful, family businesses must first look at the dynamics of the family business system.  Then, they must shift their focus from building the business to sustaining it, or to capturing the value through a sale.  The chances of a successful transition are high when the organization has been prepared for future leadership, and when the next generation of effective managers, shareholders, and family members have been developed.

Are you exploring the question: Are we a family that owns and builds up assets together? or Are we individual inheritors of the material results of an earlier generations’ dream?

Are you in the process of discovering your true legacy?  Legacy can be defined as an emotional property: what is felt, thought and said when someone says your name.  It can also be defined as a physical property: a gift of property, money, by will, anything handed down from the past, as from an ancestor or predecessor.

 

Are we a family that owns and builds up assets together? Or, are we individual inheritors?

Regardless of a family’s level of financial resources, most families desire to see each member thrive on their own.  The question becomes ‘How do we make sure we are using our financial wealth to develop a healthy family AND healthy individuals?’

A common fear of families keeping their financial assets locked together over several generations, is the fear of fulfilling the proverb “shirtsleeves to shirtsleeves in three generations” (the first generation creates wealth, the second preserves wealth, and the third consumes wealth).  This proverb can be dis-proved. The Heritage Institute research reveals “Across the centuries, through war and depression, political upheaval and social chaos, 10% of families have shown that it is possible to sustain their wealth and unity generation after generation.   Most of these families ‘discovered’ the elements of success themselves, through long and painful trial and error. They kept what worked, and discarded what didn’t.”

Jay Hughes, in his book, “Family Wealth – Keeping it in the Family”, describes four types of Wealth:

Human Capital – including all the relationships in the family (traditions, health, backgrounds, talents, etc).
Intellectual Capital – formal and informal education, work ethic, spiritual life, family stories/history & life lessons, etc
Social Capital – citizenship, philanthropy, volunteer work, etc
Financial Capital – our finances, investments, risk management, etc.

By paying attention to all of these forms of wealth in our families, and prioritizing Human and Intellectual Wealth, families have a greater chance of stepping up both family unity and prosperity.

Caroline Berry Consulting © 2017
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