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What Every Family Business Advisor Needs to Know

Lucy stormed into the conference room one rainy day in June. “I just got demoted!” she barked as she jerked off her raincoat and plopped into the chair opposite mine. “Dad just demoted me to Project Manager because I didn’t invite his new wife’s children to my son’s briss. That’s not fair!” Oh! Every family business advisor needs to know how intertwined personal and professional lives can become in family business.

Domain Crossover in Family Business

As much as we like to keep family and business separate in a family business, the two domains cross over more often than we’d expect, providing fertile ground for power plays. In Lucy's case, her father used his authority in the business to influence her behavior in the family; her advancement in the business domain hinged on expected behavior in the family domain.

It's not just parents who exercise this power – children do it too. Take Ivan, son of a real estate developer. He forbade his parents from seeing his children until his father ceded full control of the business to him. Ivan linked his parents’ access to their grandchildren to demanded behavior in the business domain.

This tension between the Family Mindset and the Business Mindset makes family business leadership a double-black-diamond level of leadership. The Family Mindset, driven by love, values fairness, sharing and unconditional belonging. The Business Mindset, driven by power, values profits, competition, and meritocracy. The values of each domain are opposed.

In Lucy’s example, her father leaned into the unconditional belonging value of the Family Mindset, convinced that all family should be invited to family events. He used his power in the business domain to exact the result he believed to be “right” in the family domain.

In Ivan’s example, he leaned into the profit value of the Business Mindset, convinced that full control of the business would help him maximize its value. He used his power in the family domain to exact the result he believed to be “right” in the business domain.

I believe it’s critical that family business advisors understand this core Family Mindset :: Business Mindset polarity, so that they can serve families more fully, more ethically, and with fewer blind spots.

Too many structural advisors (accountants, lawyers, financial advisors, and yes, some coaches) unconsciously favor the Business Mindset, and too many behavioral advisors (therapists, counselors, and yes, some coaches) unconsciously favor the Family Mindset.

Favoring the Business Mindset

Take Jay, a great consultant turned coach who said that his people approach is shaped by the work of Jim Collins: “to build a great business, one has to have the right people in the right seats doing the right things.” Jay continued, “That is true for any business or, for that matter, any high performing team. I use a consistent approach whether I am dealing with a family business or otherwise.”

That’s where we disagreed.

Inherent in Jay’s belief is that the goal of any business is to maximize profits. I don’t share that belief because I know too many family businesses who consider profit to be one of many goals, not the sole goal. Other goals might include working with the people you love, contributing to the local community, and favoring “make a living” over “make a fortune.” This is one of the privileges of private enterprise. You can determine your own reasons for being.

So, when Jay asks his client, “Why don’t you fire your cousin?” Jay may not be considering the Family Mindset which values unconditional belonging. His client may choose to generate suboptimal profits as a trade-off for working with someone he loves. (His client may instead be avoiding conflict, which is a separate issue.)

Favoring the Family Mindset

It goes both ways. Take Andrea, a great therapist turned coach who recently told me that her sole priority is to support family harmony because the health of the family is the only thing that matters.

That’s where we disagreed.

Inherent in Andrea’s belief is that if you fix the family, the family will fix the business. Although I am tempted by that belief, I know too many client families whose interpersonal challenges run generations deep, and establishing trust will take years. In the meantime, they all depend on the profits of their family business to survive, so they can’t simply drop the business domain while focusing on the family domain.

So, when Andrea asks the family for multiple week-long family retreats to work on their relationships, she may not be considering the Business Mindset which values profits. Her clients may choose to tolerate some disharmony in the office so that everyone can feed their families.

What Every Family Business Advisor Needs to Know

What every family business advisor needs to know is their bias. Do you favor the Family Mindset over the Business Mindset, or vice versa? Most everyone favors one over the other, which isn’t inherently bad. It’s just critical to know how to integrate these tensions so you support your clients more fully, more ethically, and you keep your clients in the driver’s seats of their lives.

I’m so passionate about managing the tension between the Family Mindset and the Business Mindset that I’ve written a book about it! Hug of War is coming to bookshelves in the summer of 2024. Join my mailing list to receive occasional communications about how to leverage polarities to help your family business, or your family business client, thrive.

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