Understanding the shift: From Family Business to Business Family 

Understanding the shift:
From Family Business to Business Family 

The distinction between a family business and a business family lies in the focus and mindset of the family members involved.  

A family business typically refers to the early generations (1st and 2nd generation) where the family is primarily oriented around a single business. The focus is on serving and growing that particular business. The first generation usually starts the business and the second generation continues with their parents' passion and legacy. However, the second generation often seeks a better balance between the business and the family. They recognise the hard work of the first generation but also want to maintain a healthier integration of work and personal life.  

A business family typically emerges when the transition happens from the second to the third generation. The emphasis shifts from primarily serving a single business to prioritising the family as a whole. The third generation may not have the same personal attachment to the initial business and its legacy but recognises the family's strength in conducting business. They aim to accommodate different interests and passions within the family and explore opportunities beyond a single business.  

It's a mindset shift to view themselves as a family that excels in business and seeks to expand their ventures while maintaining family unity. 

The transition to a business family doesn't necessarily require having multiple businesses or a large scale. It's more about adopting a mindset that values the integration of family interests and the flexibility to explore diverse business opportunities. Families may still remain focused on a single business but create pathways for the next generation to contribute and start their own ventures within the family's ecosystem.  

The mindset shift is crucial in allowing family members to find their place in the business and fostering a culture of entrepreneurship and collaboration.  

When it comes to personality types or generations that may struggle with these transitions, there are some general observations. The founders of a business are often driven by a particular set of characteristics, such as a non-conformist mindset, a desire to create their own destiny, and a willingness to take risks. These traits are more related to individual personality rather than being genetically inherited. The second generation tends to approach the business from a different perspective. They may act more like professional managers, seeking to introduce systems and processes to support the business's growth and stability. However, tensions can arise when their approach clashes with the risk-taking and entrepreneurial nature of the first generation.  This can lead to conflicts over bureaucracy and resistance to change.  

Overall, the transition from a family business to a business family involves navigating these natural tensions between generations and finding ways to blend different working styles and perspectives. 

With decades of experience working exclusively with families in business, Lineage Group can help families navigate the normal and predictable challenges and tensions that arise throughout business and family lifecycles.   

If you are looking for guidance or support in managing and optimising your family business or to discuss how you could transition into a business family, get in touch.