How does one succeed at managing, growing, and transitioning a business and wealth while caring for the family and its legacy

Whether you are a founder or a next-generation owner-operator you will be confronted with this age-old question.

Here are the Top 10 Steps that can help you with this question.

1. Define the Legacy and the Future of the Business

Many successful families leave behind enduring legacies. In multigenerational family businesses, these legacies are often thoughtfully cultivated, strengthened, and passed down from one generation to the next. For family business owners, legacy goes beyond familial identity; it encompasses the impact the business has on its employees, the communities it serves, and the values it upholds for future generations.

2. Know the Value of Business

Understanding the value of a family business is just as essential as knowing the worth of other significant assets, such as real estate or investment portfolios. Accurately determining this value serves as the foundation for effective planning, guiding key decisions around capital policies, distributions, buyouts, transfers, and succession strategies.

3. Establish Capital Policies

Capital policies are a critical element of any business. In family businesses, these policies guide key decisions around capital allocation, the conditions for raising equity and potential ownership dilution, the use of leverage, the sale or redemption of shares, and shareholder distributions. As an advisor, capital allocator, and a private company, our firm brings deep expertise in helping family businesses structure these policies to support long-term growth and continuity.

4. Systematize Distributions to Meet Family Liquidity Needs

In many family businesses, some family members hold shares without being actively involved in the company. This makes it essential to establish clear policies for providing shareholder liquidity and to communicate these policies effectively. Family shareholders often seek clarity regarding distributions, as well as their ability to redeem or transfer shares. They also value having a voice in setting return expectations tied to their ownership. Successful family businesses frequently emphasize the benefits of long-term ownership, highlighting how patient capital can drive sustainable growth and create lasting value for both the business and the family across generations.

5. Establish Governance, Advisory Boards, and Systematic Communications

As family businesses grow, the number of shareholders often expands across generations. In many cases, most family members who own shares are not directly involved in the business. However, as shareholders, they have a legitimate interest in understanding the company’s activities, accessing information about their ownership, and staying informed about business performance.

Clear, consistent communication with these non-operating family shareholders is essential. Many family businesses address this need by establishing family advisory boards or independent boards of directors and seeking objective advice from external experts or trusted family members. This impartial guidance not only fosters transparency and trust between the business and its shareholders but can also enhance overall engagement, productivity, and family cohesion.

6. Balance Competing Interests

Most companies eventually face the challenge of balancing competing stakeholder interests. Family businesses, however, are uniquely complex, as the family itself is a core constituency. While differing perspectives are often inevitable, establishing clear protocols for addressing these differences and fostering open communication among all relevant groups is crucial for effective conflict resolution. When consensus proves elusive, involving external advisors to facilitate discussions and provide objective, unbiased guidance can help navigate disagreements and achieve constructive outcomes.

7. Adopt Employment Policies

As businesses grow, establishing clear employment policies becomes essential. In family businesses—particularly those with large, multigenerational ownership—these policies often require greater nuance. A key consideration is determining which family members can work in the business and under what conditions. Defining these parameters early and communicating them effectively helps ensure that roles are filled by the most qualified individuals, regardless of family ties. Such policies not only promote merit-based hiring and professional excellence but also foster a shared understanding of the skills, commitment, and performance required to succeed within the business.

8. Create a Succession Plan

Most successful businesses recognize the importance of planning for management succession. In family businesses, this process can be even more complex—particularly when choosing between multiple family members or considering a non-family candidate for the CEO role. Succession planning in these enterprises must navigate not only the operational and strategic demands of the business but also the intricate family dynamics at play.

Beyond leadership succession, family businesses must also address ownership succession. Future generations of shareholders may not be directly involved in the business, yet their roles as owners remain significant. Without a clearly defined vision for the company’s long-term objectives and well-structured policies around share ownership and transfer, misalignment and confusion can arise. Thoughtful, transparent planning helps ensure continuity, cohesion, and sustained success across generations.

9. Establish a Strategic Estate Plan

Estate planning is a critical component in ensuring the long-term success and continuity of a family business. In a world where business dynamics evolve rapidly, an estate plan can quickly become outdated if not reviewed and adjusted regularly. Additionally, family circumstances, relationships, business operations, and net worth often shift over time—sometimes unpredictably—making proactive planning essential.

A well-structured, customized estate plan, regardless of its complexity, helps safeguard the seamless transfer of ownership across generations. Beyond protecting the family’s wealth, it minimizes the risk of disputes that could disrupt operations or hinder growth. By prioritizing estate planning, family businesses can preserve their legacy while laying a strong foundation for future success.

10. Build a Support Team