Sorting Out the Family 

 From the Business 



Vera Bitsch 



Department of Agricultural Economics, Michigan State University 



There is a German saying referring to family 

 business. It goes like this: "The first generation 

 struggles to build it from scratch. The second 

 generation improves it and expands it. The third 

 generation spends it." 



Although this saying does not apply to all family 

 businesses, there is a lot of truth to it. Many families 

 struggle to overcome these tendencies. Many 

 businesses get in trouble over family issues. At the 

 same time, both family and business can benefit from 

 working and growing together. 



Understanding different perspectives of your 

 family business can help you avoid the potholes on the 

 way and contribute to making the best out of the 

 opportunities ahead. 



Three Perspectives 



Of course there are a lot of different 

 ways to look at family business. Three 

 perspectives are key to meeting the 

 challenges of family enterprises: business, 

 ownership, and family (Figure 1). Family 

 businesses differ in how they are 

 organized around these three perspectives. 

 Although they overlap, they should be 

 viewed as separate subsystems. 



Persons involved in your family 

 business, whether family or employee, can 

 be looked at from the ownership, the 

 business or the family perspective. The 

 diagram shows where different people are 

 in relation to each perspective. Ever>'body 

 who is family is in circle 1. Everybody 

 who is working in or for the business is in 



circle 2. Everybody who is a shareholder is in circle 3. 

 If everyone in your family business would be part of 

 only one circle, then the tree circles would not overlap. 

 But then we would not be talking about family 

 business-that's what's special about family busi- 

 nesses: people involved in the business are part of 

 different circles. 



Some of your employees might only be part of the 

 business cycle (sector 2). Some of your family 

 members might only be part of the family cycle (sector 

 1 ). It helps to guide you and them in finding the right 

 decision if you spend some time clarifying that their 

 involvement and contributions will be different from 

 those of others who are involved in more than one way. 



Figure 1 . Three perspectives of family business (adapted from Gersick et al). 



Copyright© 2001 by the Michigan Nursery and Landscape Association. Reprinted with permission from The Voice, 

 November/December, 2001. For subscription and membership information, write to MNLA, 2149 Commons Parkway, 

 Okemos, Ml 48864, fax a request to (517) 381-0638, or check their website at http://www.mnla.org/indcx.cfm. 



Fruit Notes, Volume 66, 2001 



47 



