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Wealth of Wisdom

The Top 50 Questions Wealthy Families Ask

TOM McCULLOUGH | KEITH WHITAKER

Section 6 - Combining Family and Business

Introduction

In a unique study of families that have managed, against the odds, to preserve a major family enterprise into or beyond at least the third generation of family control, Wise Counsel Research found that 77% of the families in the study continue to own or manage operating businesses together – on average 114 years after the founding of the original enterprise! By itself, this result suggests that the presence of an operating business – with its sense of identity, commitment, collaboration, and impact – may play a large part in long-term family success.1

Of course, combining family and business is also fraught with financial, managerial, and emotional pitfalls. There are strong forces against family business continuity. The essays in this section take on those challenges and offer ways to increase the probability of continuing an operating family enterprise.

No family enterprise lasts unless future generations want it to continue. So every enterprise must find ways to engage the rising generation, ways that Dennis Jaffe takes up in the first essay in this section. He particularly focuses on increasing connection, transparency, capability, and commitment. Because the use of family meetings is so crucial to family businesses, he also emphasizes some of the best practices around designing and holding effective family meetings.

The next two essays then consider the question of how to turn engaged rising generation family members into leaders in the family enterprise. Greg McCann considers the different types of leadership needed in different situations, and then offers a model of “vertical leadership” development that focuses on potential family leaders’ ability to be aware of themselves, empathize, effectively frame issues, and inspire others to create change. Dean Fowler then offers seven habits that families and their members can engage in to ensure that their successors succeed, not just in business but in life: all the way from achieving psychological and financial independence to committing their own funds to the family enterprise.

The next two essays in this section step back to consider the relation between family unity and family business. Andrew Hier and John Davis frame the issue by highlighting the dangers of disunity and then offering specific practices for building family unity, ranging from organizational changes to changes in ownership of shared assets. Josh Baron and Rob Lachenauer then describe specific warning signs to look for that indicate that you may be losing control of your family business; many of these problems arise merely from habit or a mistaken sense of efficiency, making it all the more important to watch out for them.

Finally, Alex Scott, a descendant of the founder of the Provincial Insurance Company (UK), considers the crucial question, “Can a family stay together after the operating business has been sold?” His answer is a resounding, “Yes” – but of course that result does not come about without considerable intentionality and effort. He describes some of the practices that worked for his family, concluding with the importance of cultivating an attitude of stewardship and the desire to be valuable citizens. With this conclusion, he takes us full-circle to some of the first essays in this book, hinting that family success may depend not only on commitment to shared business (which involves doing good for customers and workers) but also and perhaps most importantly on citizenship, a sense of contribution to the nations that provide our families a home.

1See Dennis Jaffe, Resilience of 100-Year Family Enterprises (Milton, MA: Wise Counsel Research, 2018).

Preview Section 7

Chapter 35 – How Can You Engage Your Children in the Management of Your Family Wealth or Business?
Dennis Jaffe

Chapter 36 – How Can Your Family Develop Leaders Ready to Face the Many Challenges of Business and Family?
Greg McCann

Chapter 37 – How Can You Ensure the Success of Your Successors?
Dean Fowler

Chapter 38 – Why Is Family Unity So Important and How You Can Achieve It?
Andrew Hier and John Davis

Chapter 39 – What Are the Signs You’re Losing Control of Your Family Business?
Josh Baron and Rob Lachenauer

Chapter 40 – Can a Family Stay Together After the Operating Business Is Sold?
Alex Scott

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