Understanding the key transitions in your family business in relation to the family business life cycle can help you navigate the unique operating challenges of leading and succeeding in a family business. With the help of Family-Owned Business Institute of Grand Valley State University and adaptations of several online resources, The Family Business Alliance has established a Family Business Continuum to help family businesses in West Michigan understand the distinct axes of the family business model and improve the opportunity for multi-generational success.
The Family Business Continuum Axes are defined as:
The Family Ownership Axis identifies the key and controlling stakeholder(s) and is not linked to a specific generation. In many cases, the first stage of ownership is established based on a Founder’s Dream. The succession to the next generation can be either identified as a “New” Founder’s Dream or a Sibling Partnership. In a sibling partnership, the siblings jointly own the shares of the business, however, leadership may be singled out to a primary member. As the family and business operations grow, ownership models may evolve to a Cousin Consortium which includes extended family through multiple generations or may evolve to a model which includes Distant Relatives.
The Leadership Axis defines the experience and engagement of family leadership in the business. Stages include Leading the Business where control is either one primary family leader or shared among siblings. The family leader(s) oversee all strategy and operations. In Joining the Business, a potential successor(s) is introduced to build professional experience, operational experience, and industry knowledge. At this stage, the business often
implements professionalization of roles and formal processes are developed. As the next generation has its own visions and often a strong desire to introduce more strategic thinking, they assume mid-level management roles, defined as Working Together. This leadership expansion phase is often linked with restructuring and may include the development of a board of directors, family governance policies, and family council meetings. Leadership succession can span more than a decade as a succession plan is created and implemented. Each generation transitions to new roles both internally and externally as they Pass the Baton. The family may also sell or expand to different markets and the family business may evolve to a Family Office.
The Business Axis characterizes the stages of a business as it strives to move from a Start Up to Growth and Formalization, defined as the company leaving the niche market and entering a more competitive and larger arena. Often, organizations engage in strategic planning with outside professionals to meet organizational objectives to achieve Maturity and Stabilization. In this stage, the business focuses on the development of organizational talent and seeks to create a flexible framework to take advantage of market opportunities and manage threats. At Regeneration, the key stakeholders face a strategic choice for further growth and maturity. If reinvention is not prioritized, these businesses have a heightened risk of decline.
Family Business Alliance, devoted to advancing family business organizations for multi-generational success, designs its programming, resources, and events to meet the needs of its members at these distinct stages. Currently, the Family Business Alliance represents nearly 170 member organizations throughout West Michigan and offers the opportunity to create connections, elevate leadership, and navigate governance.
Understand your organization on the Family Business Continuum and download complimentary resources available through the Family Business Alliance. Serving over 165 members, Family Business Alliance seeks to advance family business in West Michigan. Together we, create connections, navigate governance, and elevate leadership.
 Sources: Ivan Lansberg, Succeeding Generations; Thwart Magazine, Family Business Life Cycle; Forbes How to Use the Family Business Life Cycle to Personalize your Family Office.
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