Essential Strategies for Thriving in a Family Business Entrepreneurial families play a vital role in shaping the global economy and society. These families, engaged in creating and managing businesses across generations, share a commitment to long-term growth, wealth preservation, and legacy building.
By Alfredo De Massis Edited by Patricia Cullen
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Unlike other business owners, they navigate complex landscapes combining personal relationships, financial management, and strategic decision-making. Family business experts and business school professors Alfredo De Massis and Emanuela Rondi who are also co-authors of the new book The Family Business Book: A roadmap for entrepreneurial families to prosper across generations, distill seven tips for successfully doing business with family, offering a comprehensive approach to make a lasting, positive impact on future generations.
1 Managing Family Firms and Understanding Their Distinctive Behavior
Family-owned firms often prioritize longevity, uphold a strong reputation, and place a high value on family principles. Such traits influence decision-making, the approach to challenges, and growth strategies. Understanding these distinctive behaviors enables family firms to balance the need for professional management with the family's values and long-term goals, leading to a business that is both successful and aligned with family identity.
2 Being and Developing Responsible Family Owners
Responsible ownership is key to the long-term sustainability of family businesses. Developing responsible owners means instilling a sense of stewardship, ethical responsibility, and long-term vision among family members. This involves equipping them with the knowledge, skills, and mindset needed to make thoughtful future-focused decisions. Encouraging family members to view their roles as caretakers of a legacy, rather than merely shareholders, promotes continuity and a sustainable approach to business and wealth management.
3 Managing Family Wealth and Running the Family Office
Effective wealth management is essential for maintaining the family's prosperity across generations. Family offices play a crucial role by overseeing investments, financial planning, and wealth preservation strategies. A well-organized family office allows families to handle complex financial activities professionally, ensuring both immediate needs and future aspirations are met. This structured approach to wealth management helps maintain financial stability and supports the family's broader objectives, from business investments to philanthropic endeavors.
4 Engaging the Family in Philanthropy and Other Impact Initiatives
Engaging in philanthropy and impact initiatives allows families to make a meaningful difference in society while reinforcing shared values and a collective purpose. Philanthropic projects provide opportunities for family members to work together on causes they care about, further strengthening family bonds and contributing positively to their communities. This involvement also helps family members see their legacy as one that includes societal contributions beyond financial success.
5 Nurturing the Family While Propagating New Families
As entrepreneurial families grow, nurturing relationships and supporting the formation of new family units become essential. By encouraging open communication, instilling shared values, and fostering a strong family identity, families can strengthen bonds that endure over time. Building a stable foundation for future generations while accommodating individual identities and aspirations within the family fosters unity and cohesion, even as the family diversifies.
6 The Entrepreneurial Family Galaxy
Taken altogether, family firms, family offices, real estate companies, family foundations but potentially also family holdings, academies, museums, incubators, and trust companies propagating from the entrepreneurial family compose the "entrepreneurial family galaxy". This interconnected system requires thoughtful navigation of ownership, governance, and management to ensure enduring success and a lasting legacy. Successfully managing this galaxy involves understanding the complexities of both financial and socioemotional assets, allowing the family to thrive while creating value over generations.
7 Engaging the Next Generation and Managing Succession
Engaging the next generation in the galaxy is essential for ensuring continuity in entrepreneurial family galaxies. Succession planning involves identifying and nurturing future leaders, equipping them with the skills, knowledge, and experiences needed to take on responsibilities. Open dialogues about future roles, combined with mentorship, empower younger family members to contribute effectively. A well-structured next-generation academy increases the chances to engage next generation members, minimizes conflict and ensures a smooth transition.
Alfredo De Massis and Emanuela Rondi are authors of The Family Business Book: A roadmap for entrepreneurial families to prosper across generations out now, published by FT Publishing
