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A business-first family business is a family business which values business needs over the needs of individual family members on issues such as: eligibility for employment, performance and compensation.

Focusing separately on the business and on the family

Devising a boundary between the business and the family can be a beneficial way to develop a business-first family business. This can be accomplished through the creation of both a Board of Directors and a Family Council; the first dealing with matters of the business, the latter with matters of the family. Dividing these crucial sectors enables clear and concise communication of the tasks without comingling issues. Business-first means putting the business in the forefront. Family or members of the family may feel entitled to enjoy in the success of the family business but without internalizing the objectives, recognizing the needs and a passion for the industry; a family member may not be the best addition.

Business values versus family values

Values are fundamental in the success of both business and family. It is important to acknowledge these values can differ greatly. This is not a problem! Consideration for divergences during decision making and focusing on the business promotes business first practices. Value differentiation can occur in the following ways[1]:

Family Values
Emotionally based
· Relationship driven
· Lifetime membership
· Support
· Security
· Equality
· Inwardly directed
· Closed system
· Avoid confrontations
· Resist change

Business Values
· Fact based
· Results driven
· Earned membership
· Competition
· Risk
· Equitability
· Outward looking
· Open system
· Face confrontations
· Master change

Acknowledging the differences provides a family business an edge; enabling a business to make guidelines for the present, future, hiring and promoting. It is important to make decisions that promote growth and stability for the business. Plus it can ease the process of hiring by selecting the most qualified candidate for an available position. The guidelines can emphasize the importance of education, qualifications and passion.

Bringing outside perspectives to the family business

A business’ primary objective is creating shareholder wealth. Value creation is the sole purpose of any business whether it be for or non-profit. Having a board of directors and a family council enables both groups’ financial interests to be addressed plus it keeps matters of the family and business separate. This can be crucial so that independents associated with the business do not feel pressed or uncomfortable. And family members can be encouraged to discuss concerns without hesitation. It is important to remember that independents, CEOs, consultants, financial advisors, even family members with outside experience have the ability to give unique perspective and possibly offer brutal questions that may never be addressed by the family. Outside influence is important. The book Family Business states “…groundbreaking research on board composition in family-controlled firms in the S&P 500 found that consistent with agency theory, companies in which independent directors balanced the influence of founding families on the board, performed better and created greater shareholder value.”[2]

Customers come first

Business comes first but customers are king! All business owners “must deal with today’s customers and tomorrow’s customers. They provide the ideas for new products and applications. They provide the early warning signals about your products’ quality and timeliness. They know about your competitors. To know your customers is to know your future.”[3] Placing the customers’ needs first coincides with putting the business first. Understanding the connection between the business, customers and family creates a culture that ultimately increases shareholder wealth.


[1] A New Look at the Business First and Family First Challenge. Fambiz.com. 2005. Retrieved 18 Nov. 2008 .

[2] Poza, Ernesto J. Family Business. Mason: Cengage South-Western, 2006. 226

[3] Fox, Jeffrey J. How to Become CEO : The Rules for Rising to the Top of Any Organization. New York: Hyperion P, 1998. 9.

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Categories: Family members in the business