In succession, family and business must be separated.

Dr Richard Shrapnel PhD
2 min readJul 1, 2024

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Photography by Ethan Hoover On Unsplash.com

The Twelve Dangers In Family Business Succession — 4. Bottomless Pit

The separation between family and business is weak, governance structures have not been established and there is a danger of the business and family falling into the bottomless pit.

Most successful businesses had their start in the form of a family business and progressively grew through the sweat, sacrifice and hard work of that family. The business is part of the family and the family is part of the business. However, there comes a time in all this business that a separation must be created between family business and the business of the business. Not to do so will at some point restrict the growth opportunities and capital value of the business.

As the business grows and non-family members begin to join in the management of the business, it is important that family matters no longer be intertwined in the discussions of the ongoing direction, performance and management of the business.

Also, as the family gathers each week, as is often the norm in many cultures, it is important that matters of the business do not dominate the evening meals and that the relationship between family members is able to be built and strengthened.

Extract from the guide ‘Transition — Orienteering The Lands Of Succession’

There is a discipline that must be brought to the separation between the business of the family and the business of the business for both to grow strongly. Otherwise, the performance of the business and the unity and harmony of the family are likely to be at risk and certainly compromised.

If the family would like to discuss business matters, considered best in the context of a shareholders’ meeting, then it should be conducted as a formalised meeting (even when in informal settings) with an agenda, a chair, a set time limit and minutes.

Often the succession process is the catalyst for the formation of the right governance structure and the opportunity of succession should be taken to strengthen the governance structures of business and family.

Here is a brief video clip that speaks into this theme with links to the full video and resources:

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