Owners of family businesses often lack adequate preparation for their role

41% of (potential, current, or former) family business owners lack adequate preparation for ownership. They primarily prepare on their own and feel that the family plays a (too) limited role in this process. Topics that are insufficiently addressed during preparation include personal development, business strategy, preparation for entrepreneurship/dealing with failure, and financial knowledge and skills. It is striking that so many owners still consider their preparation insufficient, as good ownership can make or break a family business. The requirements for owners are becoming increasingly stringent, partly due to expanding families, business transfers where little attention was paid to the psychological aspects of family businesses, and stricter governance standards. This calls for professional ownership with specific competencies to fulfill the role of owner. Three types of competencies emerge from the research: matching competencies (which refer to recognizing and leveraging valuable combinations of resources), governance competencies (which relate to value creation through effective management and an appropriate organizational structures), and timing competencies (which involve making strategic choices at the right moment). An owner does not automatically possess these types of skills simply by working in the family business; rather, they require, for example, education or training. 

The study also reveals a clear distinction between preparation for working within the family business and ownership: education and work experience are typically focused on the operational role, not on ownership and the associated responsibilities. For example, family charters often fail to specify what education or competencies are required to become an owner (whether active or passive).

A paradox is that nearly two-thirds (61%) of owners in family businesses rate themselves as good (responsible and competent) owners. Responsible ownership, along with continuity, is the top priority for owners; financial goals such as profit optimization or securing the family’s wealth rank lower. 

More than half of family businesses (54%) lack some form of formal family governance. This governance is essential for preventing conflicts within the family. Both active and passive ownership carry the risk of straining relationships within a family. The study shows that as family businesses grow larger, the degree of family governance increases.

Properly structuring ownership responsibilities is essential for both the continuity and success of a family business, says Professor Anita van Gils, Scientific Director at CEI. 

“It’s more important than ever. Many family businesses are growing, just like the family itself. Without professionally structured family governance, the risk of misunderstandings and tensions within the family increases significantly. If a business has been in the hands of the same family for generations, there can be many branches in the family ownership tree. Who should remain involved in the business, and in what capacity? What decisions do you make regarding the ownership of successors who do not work in the family business? How do you establish the dividend policy? These types of questions call for an ownership  strategy and the development of appropriate family governance mechanisms. Clearly define what ownership means within the family, for both active and passive owners, and what expectations and competencies are associated with these roles.”

Thanks to government schemes such as the Business Succession Scheme (BOR), transferring ownership of family businesses is fiscally attractive. However, the study emphasizes that a transfer is much more than just a tax transaction. For example, some respondents had received ownership certificates without the family having discussed this with them beforehand. Machiel Gosschalk, Partner and Family Business Specialist at BDO Netherlands: “Ownership is truly a governance issue that requires development and conscious choices. Many companies are still too operationally focused and pay too little attention to their family governance. Ownership goes beyond tax optimization and requires conscious choices, clear agreements, and a solid governance foundation. We  see the increasing complexity in family businesses. As a result, professional ownership is no longer a luxury but a necessity. Investing in governance early on, defining and establishing clear roles, and properly preparing owners for their roles strengthens family relationships and, in turn, the future of their business.”