When you run a business, run from family! When you run a family, run to business! When you run a family business, run.
The expressions “No family in business” and “Family in business” are quite central to business sustainability. The former points to the strictness and discipline necessary to shield a business from familiarity or “family freedom” that engenders unchecked access to a business. The latter points to family entrepreneurial orientation and the strictness as well as discipline to run a family business sustainably from generation to generation.
In business, family does not exist. In family, business may exist. In family business or business generally, familiarity or “family freedom” may constitute a hindrance to business growth and sustainability. For a business to succeed, family has to be family and business, business. The two entities should not mix, otherwise there may be nothing left to be called family inheritance. In the same vein, for a family business to succeed family must be in business and business in family.
“No family in business”
“No credit today, come tomorrow”. I once came across this inscription on the desk of a local merchant. This obviously points in the direction of preserving a business for family.
I for one believe in separating family from business for the obvious reasons. For instance, my wife runs a small food business. I always refuse the temptation of eating out without paying for my meal and that of the children and friends or other family members.
The main objective of this article is to trace entrepreneurial orientation to Family Business Interests (FBI) and value systems, copiously citing J.P. Morgan.
“Family in business”
It was the world of banking and high finance where Morgan was the most visible and made the biggest impact. Twice he put his power behind efforts to stabilize the economy. First, in 1873, he coordinated with the Rothschilds (a large and long standing banking family) to supply gold to the U.S. Treasury during the Panic of 1873 and he stepped in again in 1907. The Panic of 1907, sometimes referred to as the Bankers’ Panic, was brought on when many banks found themselves on the edge of going bankrupt with no way to save themselves. J.P. Morgan stepped in and pledged his own money as well as convincing other wealthy individuals to do the same in order to stabilize the banking system.
Family business simply put is business run by a family. Just like every business organization, vision is one of the fundamental requirements to start a family. Without vision, nothing is realizable and sustainable. Family business is family vision culminating into business activities. The entrepreneurial orientation of a family is usually tied to their creeds and beliefs. For instance, J.P. Morgan an investment banker was vehemently cautioned by his father not to venture into any enterprise outside investment banking. Thomas Edison could not have ventured into banking and finance as his entrepreneurial orientation was not fashioned in that line of enterprise. Edison needed Morgan so fate brought the duo together in what would later pave way for a new business line and inheritance for the Morgans. Family business may change or be changed, but family vision should be preserved from generation to generation. What vision have you for your family? If you are the type who is wired for business, it will interest you to know that your vision for family is not disconnected from your business values and creeds. For instance, a family that prohibits smoking will not sell cigarettes. Critical scientific analysis and test of hypothesis may however nullify my opinions due to the ruthlessness that exists in business. Sometimes family value may not be a reflection of business value.
Sustainability in Family Business
When you run a family business, run.
Run with a vision and have a succession plan. The beauty of a family business is in its succession plan. Business vision and values are transferred from one generation to another and entrepreneurial orientation is preserved. However, as important as it is to preserve family vision and values for business, it is equally important to allow for flexibility and possibility thinking as it relates to business diversification and entrepreneurial re-orientation.
J.P. Morgan & Co. is an American financial institution specialized in investment banking, asset management and private banking founded by financier J. P. Morgan in 1871. Through a series of mergers and acquisitions, the company is now a subsidiary of JPMorgan Chase, one of the largest banking institutions in the world. The company has been historically referred to as the «House of Morgan” or simply Morgan.
J.P. Morgan was not content just in the banking world – he had many interests elsewhere. Adolph Ochs, publisher of the Chattanooga Times, secured a loan with J.P. Morgan’s help and managed to save the New York Times. His personal and business interests extended to steel and railroads. He purchased U.S. Steel from Andrew Carnegie and merged it with a few other firms to create United States Steel in 1901. Over 100 years later that firm is still going strong. He also played a role in the fight over control of the Albany & Susquehanna Railroad. Morgan had an interest in and saw the potential in electricity. He and Thomas Edison had a long history which began when Morgan helped to finance Edison’s early experiments in electricity. In 1881, Morgan decided to go further and had Edison electrify his house. Then the next year, Morgan had him electrify his office building. Like other early adopters who often experience problems, even Morgan wasn’t immune. His problem turned out to be the very noisy small steam engine that kept the power running. In the end, the solution to this problem ended up benefiting more than just Morgan because it led to something bigger and better – moving away from an individual power supply to a more universal supply. Eventually Edison, with Morgan’s help, began the process to electrify the city of New York.
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