Familiarize yourself with common terms used throughout our Knowledge Base.
Governance in family business pertains to principles, structures, and documents which define the roles, rights and responsibilities of participants.
Governance controls the operation, process, practice, procedure, and policy of the family business. In setting up a family business governance structure, each stakeholder in the family-owned business has their place in the full picture of what the business is and does. Governance is built to reflect that place in a way that meshes with the reality and vision and values of your family business. Ideally, the business, the ownership group, and the family all have well-defined and understood governance structures.
Succession is a process, not a point in time. Businesses that are successful through multiple generations engage in education and preparation of the rising generation. Education can include learning about governance, your industry, and specific job functions. Preparation can include understanding your family business’s vision and values, mentoring, and leadership development, and is marked by deepening appreciation of self and others. Your business is strengthened in direct measure to the quality of preparation of the rising generations for their roles in the family business.
Family wealth refers to collective assets that a family owns, whether you consider yourself “wealthy”. You may have an operating business, a portfolio of assets, or your assets may reside in a family office or family foundation. Education and conversations about inter-generational wealth and effective relationships within the family can support good decision making and preservation of wealth.
There can be joy in family wealth planning. Your assets can contribute to community and charity work as well as provide opportunities for your family to enjoy favorite activities. All of these sustain the culture of your family and the family business.
Understanding your business culture is not a given, even among the founders.
Culture might include creating family business traditions around key points in your business such as achieving a sales marker or celebrating “founders day” on the anniversary of your original incorporation. The goal is creating touch points that give your business its own character. Furthermore, there is value when your customers sense that your family business has a stable culture that extends beyond a single person to every member of the family business. To be clear, these touchpoints are important because they mark specifics such as your family business’s profitability, durability and reliability.