27 Dec Family-Owned Business: Why is it different?
Many executives and coaches I work with ask me what makes family-owned businesses unique and different from others. After all, they have the same economic issues, the same profitability concerns, and the same primary goals.
Yes, all of that is true, but at the same time family-owned businesses (FOB) are uniquely different institutions from any other business. Let’s describe what makes family-owned businesses unique.
The primary reason why FOBs, while resembling other businesses, are very different is because AT THE HEART OF EVERY FAMILY-OWNED BUSINESS THERE IS A FAMILY. That means that whether we are talking about succession planning, profitability, executive decision making, management structure, salary, promotability, or a myriad of other corporate business issues which affect every company, in a family-owned business these issues are essentially played out differently. That is because the founder, or progenitor, needs to take into account that all of these decisions about his business are made in the context of the family owning the business, and, in the vast majority of family-owned businesses this means that other members of the family are actively involved in working in the business. This changes the playing field dramatically because, while the decisions still need to be made, and need to be made effectively from an executive management standpoint, they are influenced by the fact that these decisions involve not just colleagues, managers and workers, but ultimately family members.
Thus, the entire range of psychological and emotional issues that affect family relationships are very much in play with every family-owned business, and this changes the dynamic of what decisions are made and how decisions are made dramatically. We will review this more in my next blog.