Masterclass Insights: What is a family business?
The term family business can be used to describe any group of relatives from the first generation onwards, that own a business. This includes entrepreneurs through to multi-generational family businesses.
The family could be any of the following:
- A nuclear family of parents and children
- A blended family of partners and children from more than one relationship
- A multi-generational family
- A network of families or a large extended family or clan who descend from a known ancestor.
Sometimes the definition might extend beyond blood relatives to include those with other social or kinship ties who are considered to be part of the family.
The family will have ownership control of the business. They hold this either directly or through other entities like trusts, partnerships, or holding companies that are in turn ultimately controlled by the family. The family might also manage their business or could have hired non-family to do this for them.
The familiness of the business is established when the intention of the current owners becomes to pass control to the next generation of their family. This might have been the aim when the current owners started or took over the enterprise, or it became a goal as they grew older and the “what next?” question could not be ignored any longer.
Until this intention forms, the owners are living another dream, one that is likely to be about pursuing their individual aspirations or being in control of their own venture, maybe with some broader aims of making a fortune, building a reputation, creating employment or putting something back into society.
When the current owners in a family business start thinking ‘what next?’ concerns arise that do not affect other types of business. For example, decisions about future ownership and leadership of the business are not necessarily going to be based on business competence alone when the candidates are related to the incumbents.
The new Level 7 Professional Postgraduate Diploma (PPgDip) in Private Wealth Advising programme explores this specialist topic by looking at:
- The definition of family business
- The ‘3 Circles Model’ used to identify the range of self-interests inherent in a family business system
- The normality of conflicts of interests for the resources of a family business
- Taking a holistic view of the complexity of family businesses
- Natural governance and answering the question, ‘How are things done at this family business?’
- Identifying the key decision makers and the effects of their decisions on other family members
- The adaptability of family businesses at times of change
- The application of the ‘3 Circles Model’ to predict the future dynamic of the family business
- Options open to the entrepreneur other than succession by existing members of the family business
- A comparison of conventional corporate governance with that of family businesses
- Unit 3 covers:
- Managing the anxiety of family members in managing their business through the generations
- Survival of real and perceived threats by the family business and its members
- Emotional intelligence from the advisor’s perspective
- Likely coping mechanisms that family businesses may adopt to cope with anxiety
- The cautionary use of adversarial conflict resolution procedures.
For those interested in the programme and looking to explore what is covered in the full programme syllabus, you must register your details and interest with CLT International by visiting STEP Postgraduate Diploma - Syllabus.
You will also be provided with access to the exclusive informative ‘Standards, Research & Assessment’ webinar(s) which will explain how candidate performance is assessed.