Family Unity: A Family Business Core Strength
In a family business, family unity is critical to grow and maintain wealth across generations. While this might sound obvious, many families lack strong family unity, leaving the business vulnerable and jeopardizing its chances for long term success.
Keep in mind that families typically grow at a much faster rate than businesses. Unless there’s significant growth in company assets, a rapidly growing family will find it difficult to maintain their standard of living–including managing their family assets. It takes hard work and proper planning to ensure that there are common values and goals for the family to focus and thrive on within the family business.
Poor communication around the topic of dividing, or not dividing assets, is one symptom of weakness in family unity. When some families do decide to divide company assets among individuals, without respect for its impact on the ownership and family system, a culture of “self” rather than a culture of unity results. Business assets divided among individuals shrinks the size of the shared asset pool. With less in the pot, and a more self-focused culture, the business and its members see a decrease in quality investment opportunities.
When asked why family wealth becomes divided, people tend to focus on the technicalities: poor estate planning, poor wealth management, and so on. However, the largest threat to the division of family wealth lies in not having a unified sense of purpose and connection as a family. If money is the sole reason family members choose to stay together, it’s likely that individual members will eventually choose to take their share of wealth and control it, strengthening the culture of “self.”
Building family unity is essential for a family business to stay together and succeed over time. For many successful families, the business itself acts as a keystone of common purpose and unity among family members. New trends have emerged among families of liquid wealth, who have chosen to become more purposeful in creating tangible family connections and to protect assets from being divided.
A sense of common purpose and meaning within the family business provides the family with the motivation to complete the proper planning and manage their wealth wisely, all the while educating their next generation to do the same.
How will you build the unity in your family to keep you together for generations?