The Family Business System – Three Circle Model

All family businesses consist of three distinct yet interconnected entities:  family, management, and owners.  Envision three overlapping circles with each circle representing one of the three entities.  Each one of these circles has its own needs, wants, and demands that must be satisfied.  Where the circles overlap, the needs of each entity collide and create conflict that must be addressed.

Every family’s Business System looks different as they may put more emphasis on some of the circles than others.  One family business may resolve that the family is of utmost importance and no degree of business success is worth hurting family relationships.  Another family may see its whole identity and purpose caught up in its business.  Some families are determined to keep all the shares to themselves, while others seek external investors.

None of these variations are right or wrong and none are better than any other family business.  What’s important is identifying what circles a business family emphasizes and preparing for the conflict and ambiguity that will arise within the overlap portions of the circles.