Bailey Program director shares insights about family enterprise
Kim Schneider Malek, director of the Bailey Program for Family Enterprise, is an educator, facilitator and consultant focused exclusively on advancing family enterprise. As someone who has worked in this space for more than 25 years, she’s heard it all. And, you’d be surprised at how many misconceptions there are about family business. Schneider Malek outlines the five most common false beliefs about family enterprise below.
(1) Misconception: Family business is no different than non-family business.
Truth: Family businesses are similar to non-family-owned businesses in that they organize around pursuit of opportunity, prosperity and growth. Family businesses are unique from other businesses, however, in that they not only strive to generate desired financial results (profitability), but they also consciously and subconsciously cultivate non-financial wealth called socioemotional wealth.
Sometimes we observe or experience family-owned and family-managed businesses making curious decisions that don’t seem financially, strategically or competitively logical. This is often because the decision makers are weighing the cost and consequence of choices relative to preserving this type of socioemotional wealth.
(2) Misconception: Family businesses don’t perform as well as other nonfamily businesses.
Truth: Family firms outperform nonfamily firms, universally. The outperformance of nonfamily firms by family firms globally is demonstrated by a 6.65% difference in return on assets in the U.S., and at least an 8% difference in Europe and Chile.
Together, The Family Capital 750, a list of the largest family enterprises by sales, generated $9.1 trillion in revenues in 2018, and employed 30.5 million staff. The U.S. is still the No. 1 center for top family businesses, with 165 of its companies in the top 750, including Walmart Inc., Berkshire Hathaway Inc., Ford Motor Co., Bechtel, Cox Enterprises Inc., Liberty Media Corp., Patagonia and Enterprise Holdings Inc.
(3) Misconception: Conflict is bad in family enterprise.
Truth: Conflict itself is a reflection of differing opinions. In any enterprise, diversity of thought is essential for continuity, growth and innovation. In family businesses, conflict is often misconstrued as the great destroyer. Contrary to popular belief, families that find healthy ways to give conflict a place at the table rather than a hideaway under the rug often unleash great potential for success. Enterprising families need to learn ways of managing conflict vs. avoiding it or letting it polarize.
(4) Misconception: Enterprise only means business.
Truth: People often ask for clarification of what enterprise means. Consider the Merriam-Webster definition of enterprise: “1: a project or undertaking that is especially difficult, complicated, or risky; 2: a unit of economic organization or activity, especially a business organization; 3: a systematic purposeful activity; and, 4: readiness to engage in daring or difficult action.”
Family enterprise is one in which the family collectively places in service its human, intellectual, financial, social, time and emotional capital to achieve this, typically in a way in which the ownership family retains some level of ownership and control.
(5) Misconception: Family enterprise education is narrow and limited.
Truth: While enterprising families seek to understand the complexities and overlaps of family, ownership and management, they often find hope in interdisciplinary education.
Areas of education can include: ownership, tax, estate planning, death, wealth, finance, investing, real estate, accounting, law, compliance, ESG, corporate social responsibility, philanthropy, ethics, management, systems, entrepreneurship, technology, AI, data management, culture, governance, family dynamics, family communication, interpersonal relationships, learning organizations, curriculum design, psychology, social work, family systems, systems thinking and conflict management.
Because the scope of family enterprise education is so vast, families often seek sources and experts for knowledge, insight and perspectives to help them navigate issues. The Bailey Program for Family Enterprise offers speaker series, courses, seminars, workshops, guided learning and peer exchange forums to DU students, alumni, community entrepreneurial families, owners, family businesses, family offices, board members, executives and other influencers, like advisors, who affect decision making and the resulting consequences.