For family businesses, the choice they make around governance is most effective when rooted in something deeper than structure. Some family businesses are highly structured. Others make decisions through less formalized processes. What truly matters for governance is determining what those structures are building. And that’s where the idea of four capitals comes into play.
Financial capital is the first to consider. Many families assume that because they own shared assets, those assets are serving everyone’s best interest. But financial capital requires constant evaluation: Is the business still meaningful to the Rising Gen? Are family members finding opportunity—or feeling weighed down by obligation—through ownership?
Financial capital is only one of three capitals family businesses need to understand. You can read about the other three in “The Real Purpose of Family Enterprise Governance: Developing the ‘Four Capitals.’”
Read about the four types of capital for family business here.
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