Ownership in a Family Business as a Profession

Ownership of a family business is usually a gift from the second generation onwards—a gift that comes with many expectations, tasks, and challenges. It is associated with responsibility and privileges, with opportunities and demands, with rights and duties. The design of this ownership affects the lives of the owners themselves, their families, and all employees, suppliers, and customers—in the present and the future. Thus, the owners move in a changing and complex constellation and need willingness, competencies, and time for this.

Entrepreneurship has a very long history. Without the sedentarization of humans about 10,000 years ago and the introduction of the understanding of land as property of individuals, businesses could not have developed. Today, there are various business concepts in terms of goals, strategy, corporate culture, and legal form. Almost all of them are also found in family businesses. Accordingly, the spectrum of family businesses is large—or in other words: The goals, strategies, and structures of family businesses are correspondingly individual.

The professional competence of the owners must be combined with the willingness to use it for the family business. Competence without commitment remains ineffective, while commitment without competence may indeed have an effect, but this can prove to be little beneficial or even destructive. We see the right of an owner to commit to his property as inseparably linked to the duty to use this right competently. On the other hand, the necessity of the willingness to use the existing competence should not be underestimated. This includes, for example, dosing the commitment situationally and connecting it with the “right” competence—or in other words: doing the right thing at the right time or not doing it and carrying out the steps of action at the right speed.

The organisation of the shareholder family is regularly determined by regulations that were made by the previous generations. Whether written down or not—a structure is created that provides stability and orientation and has proven itself in the past. It is shaped by the worldview and self-understanding as well as the values and goals of the entrepreneurial family. These are subject to a possibly slow, but definitely occurring change. This creates the need to adapt the structures, with each generation should be aware that the order it created must be filled with life by others and that it can only be changed with difficulty. It is therefore worthwhile to become aware of one’s own structures in relation to various topics.

The structure of the shareholder family and that of the company are naturally closely linked. The shareholders must decide on the legal form of their company, possibly the legal organization of a corporate group, and the structure of governance. However, many legal and other regulatory requirements must be observed, so extensive expert knowledge from shareholders, tax lawyers, and business economists is required. Therefore, the shareholders need the competence to select the right advisors, as well as the competence to specify their own interests. For this, they need an overview and a basic understanding of the structure of their family business.

With the topic of secondary wealth, we are addressing a relatively young area of consulting and research for family businesses. This involves the entire wealth of the entrepreneurial family beyond the wealth tied up in the business. The part of the wealth that does not belong to the business assets, we call secondary wealth.

One of the most fundamental and important elements in all processes is communication. Without coordination, pronunciation, and discussion, people cannot successfully and reliably carry out processes. In this context, communication within a group of people should be aligned with its structure in terms of size, roles, access to knowledge, and influence. Clear communication paths are needed to ensure stable and resilient operational capability—although this is generally known, it is often disregarded. To implement good communication paths, an understanding of the common goals and maxims of the entrepreneurial family and its members with all their roles, competencies, and individual interests is an indispensable prerequisite.

The shareholders fundamentally bear the responsibility for the strategic development of their company. This statement needs to be emphasized on the one hand and explained on the other: It is a principle of the organization that tasks and the responsibilities required for their fulfillment can be delegated, but the responsibility for the essential results of task fulfillment remains with the superior, delegating authority.

The total assets, which consist of the original company and the secondary assets, must be structured according to the requirements and objectives of the owning family. The secondary assets have the task of balancing the disadvantages of investing in the family business in terms of the overall objective. This overall objective must be developed by the family shareholders themselves. Two major areas of influence are decisive: the development status and risk of the original company, as well as the life circumstances of the entrepreneurial family, which can change significantly over generations.

The topic of succession can be described as fateful, as it has far-reaching effects on the future of the family business due to its decisive character. Moreover, it touches all areas of the family business: the structures and processes of the family, the business, and also the secondary assets. Succession resonates as a recurring theme in many questions and permeates all areas. It can be related to ownership or leadership, and often both are linked together.

In the preceding chapters, we have described many topics, experiences, and views. The owners themselves can only determine which of these many suggestions are guiding in individual cases. We believe this is possible, as a successful entrepreneurial family—and every owner family facing challenges today is one, otherwise they would no longer exist as the owner of a company—is quite capable of thinking for themselves and exerting influence. In this chapter, we offer assistance in independently understanding, analyzing, and deriving necessary steps from one’s own situation, structure, and constellation. Graphics that can be filled out, questions, and checklists serve this purpose. We draw on some illustrations and tables that we introduced in the previous chapters. All of them can be adapted, further developed, and supplemented by others. We want to stimulate reflection and initiate discussion on relevant topics. We hope to make it easier for owners to get an overview in this complex field and to encourage them to shape their ownership in a targeted manner.