Most family businesses rely on traditional financial tools when assessing the financial soundness of a new investment. These tools are good at answering how to do something, or whether the math makes sense. But they don’t help much with figuring out what the business should actually invest in.
In a family business, investments aren’t just about making money. They also need to match the family’s long-term goals, values, and risk tolerance. They should fit the family’s vision—for both the present and future. Deciding what to invest in is just as important in figuring out how to do it.
Family businesses typically fall into one of four categories based on their goals. Each of these goals leads to different types of investment decisions. You can determine which category best describes your family business in “Capital Budgeting and the Meaning of Your Family Business.”
Read about what your family business should invest in here.
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