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FAMILY ENTERPRISES
25
Family Enterprises:
Building Blocks for Success
WHAT MAKES some family enterprises
so successful? Building financial wealth,
creating harmony, and preserving a
family’s legacy across generations doesn’t
come easy. Especially when you consider
that a family enterprise is so much
more than just a family business. It is
the family business; but it also includes
other financial assets, real estate assets,
heirloom assets, life insurance, and the
family’s philanthropic endeavors.
When asked what successful family
enterprises have in common that make
family harmony and wealth creation
across generations possible, a common
answer is “have a Family Business and
Succession Plan”. It may surprise you that
this answer is wrong. Studies have found
there is no correlation between having a
plan and having a successful transition to
the next generation.
So how do successful family enterprises
build wealth, create harmony, and protect
their legacy across generations if a
succession plan is not the answer? The
answer lies in three fundamental building
blocks that successful family enterprises
almost always share.
The first building block is to invite outside
advisors into the family business. Often
this involves a Board of Directors that
includes either independent directors or
the participation of a Personal Advisory
Group. The independent directors and
PAGs provide fresh perspectives and hold
the family business accountable for their
decisions.
A second building block is to create a
Family Constitution. A Family
Constitution is a foundational document
that lays out the vision, values, and
policies of a family. It informs all
members of the family about where they
have come from, what they stand for, and
how they want to conduct themselves, in
and outside of the family. A Family
Constitution supports all the decision-
making processes in the family,
ownership, and business structures.
The third building block is having clear,
open, and honest communication, usually
in regular family meetings. The purpose
of family meetings is to hone decision-
making skills, to provide a space for
conflict resolution, and to bond and build
trust amongst family members. Regular
meetings reaffirm a family’s values and
long-term vision.
There are numerous other common traits
that most successful family enterprises
share. However, it is the three building
blocks referred to above that provide the
basis for a firm foundation for family
success.
Simple? Or does it sound simply
overwhelming or unrealistic? Families
have a remarkable resilience and ability to
overcome most challenges they face.
Developing a Family Constitution and
creating an environment where
opposing views can be discussed with
independent directors or within the
family can be a difficult process. It is
a challenge that requires a shared
Ian Burroughs is a lawyer and Family Enterprise Advisor (FEA) at the law firm of
Kerfoot Burroughs LLP. Ian has 25 years of experience in providing creative advice
and recommendations to family enterprises and the individuals that comprise
them. Passionate about applying his combination of legal and FEA skills to his
family enterprise clients, Ian enjoys the thoughtful application of practical solutions
to unique issues. Ian received his Juris Doctor from the University of Victoria Law
School and his FEA designation from the Family Enterprise Xchange.
vision, open and honest communication,
professional advisors, and a workable plan.
As with any project, having an
experienced project team is essential.
Family enterprises ready to create their
own building blocks of success are advised
to contact the Family Enterprise Xchange
(family-enterprise-xchange.com) and
consider using the services of experienced
family enterprise advisors to help the
family. Being a successful family
enterprise doesn’t come easy, but it can be
easier with thoughtful solutions from those
fluent in the language of family
enterprises.