We’ve all heard the adage, which comes first, the chicken or the egg? In our family business, our adage is, “Which comes first – the family or the business?”If you’re involved in a family business, you can likely identify with that statement. I know there are many times when I’ve felt the business came first and the family second. I also know that are just as many times when the family came first and the business came second. I don’t know about you, but it seems easier to remember the times the family played “second fiddle” than the times it was the star. My heart remembers those times, but my head remembers both.
Jay Hughes has been working in the field of family wealth and family enterprise for many years. I recently watched a video interview series conducted with Jay. His explanation of family wealth was enlightening. His definition of family wealth included 5 capitals:
- Spiritual capital – families needed to have a shared vision & purpose
- Social capital – How are we taking care of the family and the community? Is there strong stewardship of the family resources so they continue to contribute and make a difference in years to come?
- Intellectual capital – was everyone learning? Learning included formal education, family governance, mentoring/ coaching and determining rights and responsibilities.
- Human capital – did each family member feel supported to thrive? Thrive in work? Thriving physical and emotional health? Thrive in their contributions to family or community? Individual dreams, personal development, value and morals are nurtured when human capital is built. Do we have the ability to get along and make decisions by consensus (not by agreement)?
- Financial capital – financial resources.
What I found really inspiring was Jay’s description that the financial capital needed to support the other 4. This interpretation resonated with me as many family enterprises have sacrificed the other 4 capitals to build financial capital. Think about how your family wealth would score on each of the 5 elements? Where are you investing in your family wealth? Which “pots” need some deposits made into them?
So which comes first, the family or the business? Successful Family Enterprises know that the family comes first. The business is a tool that supports the family. What’s your family’s purpose?