The Business of Family: An Effective Financial Model

That’s right. I said “Business of Family”, not “Family Business”.

A Family Business is a business with two or more members of a family as owner(s) and employees. But the Business of Family does not require more than one member of the family to be employed in any given business. In fact, it does not even require a family member to own a business at all.

So what is the Business of Family, and how can you engage your immediate family members in it in a mutually beneficial way? Not unlike a regular business, there are four basic steps to remember:

Have each family member clearly define his or her personal goals and create a plan of action for achieving them. Each one, even children and dependent adults, prepares a plan to the level of their capability with whatever help is required from other members of the family.

Create a budget and a time line for the achievement of each goal. This does not guarantee that all goals will be achievable exactly as envisioned or in the time frame that each family member might wish. Waving a magic wand or rubbing a genie lamp will not ensure that your wishes are granted. But this does separate the “pie in the sky” from reasonable expectations and positions goals somewhere in between.

List current family financial and other resources. Narrow the finances down to essential family expenses such as a roof over your heads, food in your stomachs, clothes on your back, and the acquiring of at least a basic education. And identify some of the specific skills and resources of each family member that might be used to collaborate with the others.

Now engage in a family discussion in support of each one’s achievement of their goals. This is where creativity and collaboration come into play in a big way. Plans for an elaborate vacation or a new car next year might be pushed back a few years to accommodate a unique educational or business opportunity. Longer term planning might become the strategy for another. Getting a part-time job the solution for another. Or even swapping household or other duties in exchange for help in other areas.

While you can’t just grow money on trees in your back yard, the benefits of a Business of Family meeting include a better understanding of money and time management, goal setting and collaboration. In the sharing of personal goals and the discussion of solutions, children, and adults learn to be better and more creative problem solvers. Last but not least, each learns the value of deferring instant gratification in exchange for higher future values.

Of all skills, these are the ones that are essential to living a fulfilling life and to running a successful business.