What Is a Family Business?

I have always believed that family has a built in advantage in business. From my perspective the natural behavior of family provides both governance and teamwork benefits. Unfortunately some families leverage their natural behaviors better than others. The wide variation of performance among family businesses brings up the question, “What makes some family businesses better than others?”

Before we answer the above question, let’s discuss the definition of family.  From my experience, I do not believe that a shared gene pool adequately defines family.  Throughout my career I have continuously observed, what I define as “Blood Related Business Groups.” Their only common bond is their shared gene pool, as they are not the least bit congenial and have the business compatibility of dogs and cats. Some of these loving brethren go out of their way to make life difficult for their kin. The members of a Family Business however, utilize nostalgic experiences, amicable feelings and prideful emotions to form reassuring, safe and comforting bonds. In contrast one or more members of a Blood Related Business Group develop their feelings and emotions towards justifying and reaffirming jealously, anger or resentment at their so called brethren.  As a result of these types of groups, I believe family, with respect to business, should be defined in terms of behavior not genes. In support of this belief, I contend that the definition of a family in business is two or more people working together for reasons other than money. If money is the only bond holding a collaborative group together, the glue is very thin and highly combustible. I would not be placing any bets that long term goals will be achieved in the hot world of contemporary business.  

So, what makes some family businesses better than others? Watching family interaction you would typically identify behaviors such as hanging out, touching, listening, laughing, crying, collaborating, encouraging, affirming, supporting, etc. Diving deeper, what are the seemingly mystical spiritual feelings that characterize the family behavior which has values higher than money? Fundamentally, it is the two spiritual feelings of respect and trust. A productive family business exhibits genuine family behavior that is rooted in trust and respect for each other. With this type of behavior being the foundation of family interactions, the result is a safe, affirming, productive environment.   “Walton” fans would naturally ask “where is the love in this family cocktail”?  I believe that love is a frequent companion of families and a complement to families in business, but not a critical factor. In fact, I commonly work with family members who do not like each other but work together successfully because of respect and trust. Families in business can work just fine without love but they become just a struggling BRBG without respect and trust.  In the absence of respect and trust, the joint effort revolves around the money which is not the number one priority of a family.

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