If your family owns a business or manages family investments, you know that family get-togethers are often dominated by conversations that center on the business’ operations. There is an important time to talk about business. However, it should not interfere with or compete with the other purposes of your family. The ideal is that everyone understands that while you are a family that owns a business, you are not a business that owns a family.
While every family member may not be suited to play a significant role in a family business or investments, they should still be honored as a valued family member. Creating equality within the family (within each generation) while keeping hierarchy in a business so everyone can succeed on their own can be a difficult balance. The key is creating family activities and roles for those who are not executives in the business to make meaningful contributions to the family. Also, families have to separate family and business funds so that the business doesn’t become the family ATM, creating cash-flow issues for the business if dispersed, and hard feelings for family members if not dispersed. Each entity – the family and the business – must have autonomy for success.
One family with a successful business funded MBA degrees for two younger family members as part of their preparation to move into management of the business. A third family member in the same generation asked for funds to obtain a masters degree in philanthropic studies. This request was denied and crushed the family member who did not get the education. When asked why the patriarch didn’t give the money his reason was that the MBAs were seen as an investment in the company, something they do for other key employees, and he didn’t have the cash flow for another degree at the time. Obviously this caused discord as it appeared that one got special treatment only if it was valuable to the company. The family ended up setting up a “family fund,” where all family members had a say as to who had the opportunity to get scholarships for degrees. This provided all family members the opportunity to get an education and be valued by other family members and protected the business to only fund investments in the businesses future.
