Depending on circumstances, there are usually eight groups of key stakeholders in family businesses. This may vary slightly from one family business to another, so it’s always worth considering every possibility. Each is important to understand and work with, for the future of the business and morale in the bigger team.
The most obvious group and depending on your point of view, probably the most important. With the proviso that without others in the team, they will find it hard to be successful on their own. The business began here and often they hold the biggest share in the value of the family business.
Whilst often not having a direct share in the business, the folks at home can often have a significant influence on those who do. These might be husbands or wives or children of the first group, or even wider. If this group is not fully appreciated, their actions, attitudes and beliefs can impact on the behaviours of those who do own sizeable chunks of the business.
In many family businesses and for a variety of reasons, some of the shares in the business might have been given to others from outside. These might be commercial decisions to raise capital or simply where senior managers have been introduced for their expertise and have been offered a stake in the business success. They will usually have a smaller share than family members and need careful involvement to ensure the value of their ownership is maximized.
Although not financial stakeholders, the influence of those who will form the next generation of owners of the family business will be significant. Many family businesses have a sense of purpose around leaving a legacy for the family and current owners will often shape their thinking around what they are creating for their children. The influence is subtle, subconscious and generated internally by those protecting a business for their children.
Most family business enterprises will have many more non-family employees than family members. Purely because of the numbers needed to build even a modest business, it will be necessary to entrust the business in many areas to outside help. Good communication will be vital with these people and actions taken to integrate them with the values, standards and ethics that the family feels important.
Customers & Clients
Many say that the customer is the most important asset to any business. Others suggest that those employed in the business are at least as important, if not more so. This group is a pseudo-stakeholder in any business, family or otherwise. Yet for family businesses, the relationships they hold with customers can be a huge asset. Nurturing what might have been generations of interdependency is a critical role in both directions, so this group is a valuable stakeholder in the success of the family business too.
As with customers and clients above, generations of relationships between a family and their suppliers can often be found. It’s more likely to be amicable and synergistic when years of trust have built up. As stakeholders, there is ‘mutuality’ about each being supportive and enthusiastic about the other’s success.
This group could sit partly in other sections and yet, there is a difference. The best family businesses bring others in from outside to support their growth and health. Non-executives provide this function often with little tangible reward. They are the essence of a stakeholder who seeks success for the business, as an inbound paid expert who can bring wisdom and experience.
These are the 8 key groups of stakeholders in most family businesses of any size. It can be difficult for inward looking owners to pay respect to each of these groups and yet, when they do, their business has the likelihood to be more successful; better motivated and ultimately well-placed for a successful handing down to future generations.