Family business models essay examples

Superficially, warring family members were arguing about compensation and dividends. In reality, disagreement ran deep about what it meant to be owners in their family business system. Some family members were adamant that owners should work in the business, while others passionately disagreed: “This is our inheritance!

The best way to head off these crises is to understand that there are different ways of owning family businesses. Although there are hybrids, most family businesses adopt one of five models of ownership. One of the most important decisions you’ll ever make is to choose which model to adopt.

For the nested model to work, the family runs the core business as a profit-making operation and distributes relatively large dividends to the branches, which then use the money to create their own business portfolios. The nested model can effectively reduce tension among branches while keeping the family together as a whole.

Some family members were adamant that owners should work in the business, while others passionately disagreed: “This is our inheritance! The breakthrough came only after the warring camps became aware of the five basic ownership models: owner/operator, partnership, distributed, nested, and public.