For some families, the entrepreneurial spirit seems to run in their blood. Generation after generation, family members continue to start and run their own businesses with enthusiasm and success. This “family venture itch,” as it is sometimes called, creates a unique dynamic within these families as business and family become deeply intertwined.
In this article, we will explore the following angles around family entrepreneurship:
- The pros and cons of family ventures
- Challenges family entrepreneurs face
- How to maintain family harmony
- Famous family entrepreneur dynasties
- Tips for raising entrepreneurial children
Whether you are part of a business family yourself or simply interested in the topic, read on to learn more about families who catch the venture bug.
The Pros and Cons of Mixing Family and Business
Launching and running a profitable business with your relatives definitely has its advantages. For one, you already have a level of comfort, trust, and communication with your family that makes working together smoother. You also have a shared legacy and likely similar values around money, work ethic, and business practices.
However, every family has its dysfunctions, and bringing those into a high-pressure business setting can become problematic. Disagreements over company decisions and jealousy around salaries, ownership, and roles can lead to tension. And if the business fails, you risk damaging family relationships in the process.
Key Pros
- Trust and comfortability between family members
- Shared legacy and values
- Passing business down through generations
Key Cons
- Family dysfunction can hurt the business
- Disputes over decisions and pay
- Failure damages family relationships
Overcoming Common Challenges
To help family businesses thrive over the long haul, entrepreneurs must proactively address a few common pitfalls:
Defining Clear Roles and Responsibilities
To avoid conflict, family ventures need to establish clear policies about hiring, compensation, promotions, etc. Make sure all family members feel there are transparent processes governing key business decisions.
Separating Business Finances from Family Finances
Mixing company accounts and family accounts often breeds resentment around how profits get invested and who benefits. Develop budgets that distinguish money for salaries and dividends versus money for household expenses.
Allowing Non-Family Executives into Leadership Roles
Over time, qualified non-family executives need pathways to advance into leadership roles based on merit, not bloodlines. This facilitates innovation and keeps the business attractive for top outside talent.
Defusing Tensions Early and Often
Family businesses should implement regular forums for airing grievances before they escalate into lasting divisions. Monthly meetings work to discuss decisions, provide feedback, and address simmering disagreements.
Maintaining Family Harmony
Launching a family venture often strengthens bonds between relatives as you share the emotional ups and downs of entrepreneurship. However, without care, it can also strain family ties. Here are tips for keeping relationships intact:
- Discuss “rules of engagement” for handling conflict
- Agree to avoid discussing business at family gatherings
- Get family counseling to work through recurring issues
- Never make business decisions based on emotions
- Show appreciation for each other’s contributions
Famous Family Business Dynasties
Some prominent family entrepreneur dynasties that stand the test of time include:
The Walton Family
The heirs to the Walmart empire still own over half the retail giant after founder Sam Walton passed the business down. The Waltons are currently the wealthiest family in America.
The Ford Family
Henry Ford’s descendants have maintained ownership and control of the Ford Motor Company for over 100 years across four generations, a rarity for most family ventures.
The Pritzker Family
This Chicago clan inherited the Hyatt Hotel chain from patriarch A.N. Pritzker and branched into many other industries. Eleven heirs still share the family fortune.
Raising Entrepreneurial Children
Parents can nurture an entrepreneurial spirit in their kids through actions like:
- Exposing them early to the family business
- Letting them take risks and make independent choices
- Praising them for initiative, not just accomplishment
- Encouraging them to identify problems and create solutions
- Teaching the fundamentals of business and finance
For generations, the “family venture itch” has compelled relatives to go into business together, for better and worse. With open communication, clear ground rules, conflict resolution processes, and commitment to the family bond, parents, children, siblings and cousins can nurture an enterprise that bears fruit for many years.
