Secrets of Successful Business-Owning Families

Fear that your children will squander the wealth you built throughout a lifetime of hard work can be the very thing that undermines a successful transfer of your wealth and values. Learn how to avoid this fate with five secrets of successful families.

For successful business owners, a top concern is often the impact their success will have on loved ones.

The well-known business adage “shirtsleeves to shirtsleeves in three generations” portrays a cautionary tale of how successful business owners risk having their life’s work squandered by heirs, leaving grandchildren and other relatives left to start the process of building wealth all over again.

New data has called into question the accuracy of this premise, finding that such fear-based planning can hinder the ability of future generations to build on past success and even lead to family tension. In fact, behavioral research finds that building collaboration and trust is more effective in equipping rising generations for the responsibilities of protecting and growing wealth rather than rigid and overly restrictive estate plans.

Northern Trust has studied the behavioral patterns of generations of business owning families and found five clear behaviors embraced by successful families. These shared characteristics of familial success have a common theme: taking a collaborative, multigenerational approach to managing wealth.

Avoiding family conflict and ensuring the continued success of your business requires wealth creators to be very intentional and deliberate in preparing their families for success. In this sense, success is defined not just in monetary terms, but also in the well-being and happiness of your whole family.

In a new paper, we share five secrets of successful families learned from working with successful business owners and their families across generations.