Who really owns the family business?

Picture of John Broons
John Broons

John Broons is a globally awarded family business expert. One of only three people in Australia to hold the coveted title of Fellow of Family Firm Institute (Boston, USA), John has dedicated his working career to answering the question: how do I guide and support families in business to a place where they’re thriving?

Owning a family business is a source of immense pride and joy. It represents the fruits of your family’s labour, passed down through generations. Yet, the concept of ownership in a family business is far from straightforward. It encompasses both legal and emotional dimensions, creating a complex dual ownership structure that requires careful navigation. 

Owning a family business is a source of immense pride and joy. It represents the fruits of your family's labour, passed down through generations. Yet, the concept of ownership in a family business is far from straightforward. It encompasses both legal and emotional dimensions, creating a complex dual ownership structure that requires careful navigation.

In this article, I’ll delve into this multifaceted nature of ownership, exploring the limitations of legal ownership, the significance of emotional ownership, and strategies for clarifying who truly owns the business.

Legal ownership – beyond control and decision making

Owning a family business is more than just holding legal documents. It involves a deep emotional connection to the business, a sense of responsibility, and a shared commitment to its success. While legal ownership establishes control and decision-making rights, it falls short of capturing the essence of true ownership.

Legal ownership determines the distribution of shares and decision-making authority, forming the backbone of the family business structure. However, relying solely on legal ownership to determine who truly owns the business overlooks the intangible factors that contribute to its success. It fails to account for the emotional investment and dedication that family members bring to the table.

The essence of emotional ownership

Emotional ownership encompasses the passion, pride, and sense of purpose that family members feel towards the business. It is nurtured by shared family history, values, and the desire to build a lasting legacy. Emotional ownership drives commitment and can influence decision-making, even in the absence of formal legal authority.

Some simple strategies for navigating emotional ownership of a family business can include:

  • Regular family meetings: create a space for open and honest dialogue, fostering greater understanding and alignment among family members. Discuss roles, responsibilities, and individual aspirations to build consensus and mitigate conflicts.
  • Communication practices: encourage transparent communication channels to ensure that all family members have a voice and feel valued. Foster an environment of trust, where concerns can be raised without fear of judgment.
  • Succession planning: develop a robust succession plan that considers both legal and emotional aspects. Involve family members in the process, allowing them to express their desires and aspirations for the future of the business.

Integration for authentic ownership

To determine who truly owns the business, it is essential to recognise and navigate both legal and emotional ownership. Legal ownership provides the framework, while emotional ownership fuels the motivation and commitment needed for long-term success. It is the integration of these two dimensions that defines the authentic ownership of a family business. By acknowledging and reconciling these dual ownership aspects, you pave the way for a stronger, more resilient, and prosperous family business that can thrive across generations.

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