Open up a family business and you will find within a three-way structure of dynamic subsystems; the family, the ownership and the business. These three must continually adjust to one another to maintain balance among themselves for their own health and that of the entire business. What’s tricky about that? Each of the subsystems has its own set of priorities.
Priorities for the Family subsystem are:
Priorities for Ownership are:
- Dividend Distribution
- Stock Appreciation
For the Business subsystem priorities are:
- Market Share
Set out like this, it becomes easy to see where points of contention may exist as the systems’ moving parts meet and inevitably impact one another; where family harmony intersects dividend distribution; where innovation meets control; where market share runs aground of stock appreciation…
These are a just a few of the many ways these three subsystems can become unbalanced, creating inter-family conflict, operations slowdowns, loss of profitability and overall damage to the sustainability of the business and the family.