As family businesses move into their third or fourth generation, ownership is often spread among many cousins who are not involved with the business as employees, executives or directors. These “distant” relatives often lack emotional ties to the business or to their extended family. Their ownership often represents a substantial, undiversified, illiquid investment which some might be pleased to sell.
But in many cases, even distant shareholders remain committed to their family business for the long term. Having examined the Family Mission Statements of business owing cousin clans we find three key reasons why many stay together with shareholders voluntarily choosing to keep their shares — even at a sacrifice to personal independence and financial diversification:
- To Perpetuate Values.
As one family’s mission statement puts it, “Our mission is to create a legacy of values.”
- To Cultivate Personal and Family Growth.
Another family states, “To assure an environment for learning, for personal growth, and for developing family strength.”
- To Fulfill Some Social Purpose.
One family puts it well: “To make a difference by providing worthwhile and satisfying jobs for the young people of our community.”
We find that “maximizing profits,” or “achieving market share,” or “satisfying customers” are not prevalent themes in family mission statements — though those concepts are often elements of strategy. Instead, the mission statements that work for cousin-owned families in business focus more on emotionally inspiring family members for a family-fulfilling purpose.
Committed, unified shareholders help provide the competitive advantage to realize profits, to earn customers, and to motivate employees.
How Cousin and Sibling Businesses are Different Siblings
- Most family owners work in the business.
- Most family shareholders are on the board.
- All family members grew up with the business as the center of the family.
- Each family member owns a substantial percentage of company stock.
- Family members know each other intensely, for better or worse.
- Most family owners don’t work in the business.
- Most family shareholders aren’t on the board.
- Many family members grew up emotionally apart from the business.
- Most family members wn a small percentage of company stock.
- Family members don’t all share the same parents and intense relationships.