A ‘family business’ is more than just a business owned and operated by a family. In addition to being a vehicle of wealth creation and entrepreneurship for the family, these businesses can bring other non-financial benefits – known as “socioemotional wealth” or “social capital” – to family members.
Being part of the family enterprises brings feelings of pride, personal reward and satisfaction, and can constitute a part of family members’ identity.
These additional intangibles are very important when it comes to succession planning, from bringing in new family members to handing over the reins at the appropriate time.
It’s worth noting that this additional emotional bond between family members and the business can be a double-edged sword: it can also drive poor decision-making and conflict. The key is to be aware of these additional non-financial dimensions in a family business, and to manage them proactively.
Consider This: Do you talk about your family business? I don’t mean “business talk” – I’m talking about how family members feel about the business, what it does, its history, and importantly its future.
Original articles: https://www.forbes.com/sites/robclarfeld/2019/03/19/family-businesses-social-capital-is-key-to-successful-succession-planning/#5a97d8b05713, https://www.crainsdetroit.com/special-report/beyond-profits-family-businesses-can-create-socioemotional-wealth
Reprinted with permission.
Actionable Generational Wealth Succession
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