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Always Balance Family and Business in a Family Owned Business

Family Owned Business: The Other Side of the Coin

On February 19, 2018, Financial Poise published an article by Bruce Werner, the regular contributor to this column, entitled, “Effective Private Company Board Strategies Drive Goals to Completion.” Bruce highlighted that driving strategy is a principal responsibility of a private company’s board of directors, and that driving strategy is how that board of directors creates value in the enterprise. In a family owned business, understanding the owners’ goals and translating them into an actionable and measurable strategic plan is key, Bruce posited.

That’s absolutely true.

However, there is another side of the coin that demands concurrent attention. As time moves on and business conditions, imperatives and opportunities change, change will also necessarily come to the family that owns the business: change in thinking, priorities, objectives and needs. Change will also occur within the family itself and in how its members collectively and individually relate to the business that they own (and how they relate to each other).

The Value of Balance in a Family Owned Business

There is a crucial balance that must be achieved and maintained between the business goals and the goals of the family that owns the business. Strategic planning for the business alone, certainly very important, can cause a breach in the delicate balance. Maintaining the balance requires strategic planning for the family just as it does the business.

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Family leaders must develop strategies to meet the objectives sought by other family members and to address the challenges sure to come their way, taking into consideration any goals, risks, capabilities and competing interests.

There is a crucial balance that must be achieved and maintained between the business goals and the goals of the family that owns the business. Click To Tweet

There is a need to find ways to bridge and resolve identified gaps. There is a need to understand the direction the family wants to go, together and individually, while also looking to set a direction for the future in the business they own.

A Family at Odds Means a Family Owned Business in Jeopardy

Last year, I was asked to join the board of a private, second-generation family owned business as its first independent director. Ownership was divided equally among three brothers, each of whom held a board seat. While the business was profitable, its industry was changing significantly, and the family recognized that a new strategy was needed for continued growth and profitability..

Yet, as early as my initial board interviews, it became evident that the brothers were at odds, not only over several significant business issues, goals, plans and policies, but also their impact upon the ownership group. Evident, too, were family-impacting failures of respect, values, ethics and performance accountability, among others. Angers and frustrations were strongly voiced, making respectful and constructive cross discussion virtually impossible.

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I will leave it for another chapter to say whether I agreed to join this board. Suffice it to say that I made it very clear to the family directors that they were out of balance as a board and as a family, and that they were at very real risk of “killing the goose that lays the golden eggs”.

Needs of the business will evolve as will those of the family.

Changes and complexities will always be present. Needs of the business will evolve as will those of the family. The essential challenge is how to deal with them in sync. Families must think strategically and proactively about themselves, just as they do in their business. Maintaining the critical balance is essential to success.


This article was guest authored by Barry S. Cain, an expert in Family Business planning and co-founder and director of the Chicago Family Business Council.

About Bruce Werner

Bruce Werner is the Managing Director of Kona Advisors LLC and served as an outside director on private company boards for the last three decades. Kona Advisors LLC provides advisory services to the owners, investors and CEOs of private and family-owned businesses. With deep experience in governance, succession planning, finance, strategy and management issues, Kona…

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