Family businesses aren’t only about profits; they are about a shared purpose, people, and impact that transcend generations.

Over 70% of businesses in the world are family-owned, yet only a small fraction make it beyond the second generation. This statistic was simultaneously shocking and humbling for me. I began to think about what helps a family business thrive across generations. The pursuit of this answer has guided my journey as a governance advisor.

Entry into the world of family businesses

My background and entry into the family business are rather eventful. After completing my MBA, I married into a third-generation family business. Naturally keen to understand the family business and its workings, I was in for a surprise. My entry coincided with a period of transition. What I witnessed were typical family business challenges; as is often the case, business issues would unwittingly slip into family issues. Both the family and I were unprepared to deal with these, resulting in stress and uncertainty.

The Turning Point: Governance Education

Luckily for us, we enrolled in a family business course. The sessions were eye opening for us. We realized that what we were facing was not isolated to our family, rather it was something all families faced. While successful families in business excel at doing business, they often struggle with family related issues such as engagement of the next gen in the business, managing relationships, etc.

Governance education was a game changer for us as a family, making us realize families need governance education more than they need business education.

What is Governance Education?

Governance education is the process of teaching and implementing the frameworks, policies, and structures needed to effectively manage and govern a family business. It goes beyond traditional corporate governance and focuses on the complex intersection of family relationships, business, and ownership.

The key features of governance education include learning how to:

1. Define roles and responsibilities to help establish clear boundaries between family and business. This prevents confusion and conflicts over decision-making authority.

2. Craft a family constitution that outlines how the family intends to work in the present and in the future.

3. Create and manage communication forums such as a family council or a board of directors, to ensure that both business and family are heard.

Governance education is a proactive tool that helps create a system for dealing with the challenges of working in and belonging to a family business.

Legacy, Not Just Advisory

The future of family businesses matters to me because of the impact they have on the economy in terms of GDP, jobs, taxes and sustaining communities. The economic impact of a failing family business is not just the loss of the business itself, but the ripple effects it creates.

Although the challenges family businesses face are unique, they are not entirely unsolvable. Families in business can learn to navigate these with awareness, preparation and courage. Governance education is the foundation for ensuring families realize that the intersection of family, management and ownership do result in dilemmas and paradoxes.

My mission as an advisor is to champion governance for family businesses. To facilitate building frameworks for harmony and sustainability by helping families turn conversations into actionable plans.

My experience founding Pakistan’s only next gen education program at the IBA, Karachi further strengthened my belief in the power of governance education Stories of next gen transforming the family business keep me inspired to continue championing governance education.

I work with families in businesses because I believe stronger families lead to stronger businesses and ultimately stronger communities. For me, the work I do is not just advisory, It is legacy building.

Link: https://www.familybiz.solutions/family-business-engagement-program/