On the contrary side of things if any part of the three-circle model of family business is out of synch it can be detrimental to the family, ownership and the business as a whole. .
Family members do not have to actively participate in the business to make the company a family business. These different positions range from, being a member of the family, to having an equity stake in the business, to working in the business or any combination of these. Any of these positions in the family business can create serious conflict if not managed properly. Maintaining a balance of all three of these categories is something that is strived for but not always achieved. What makes this dynamic complicated is the fact that families change and grow, which makes ownership difficult in the future as well as making it stressful on the business. As the family grows in size more and more members of the family will want to assume high powered positions within the company that are always not there or sometimes the family member is not qualified for. This conflict can crumble a business if not managed correctly and even worse, it can tear a family apart. People in life will always be greedy and want more, which makes managing this dynamic of family, ownership and business very difficult. .
One of the most complicated periods for a family and its business is when ownership is transferred from one generation to the next. If this process is not planned well in advance, many conflicts can arise that can ultimately terminate the business. 66% of all family businesses in the first generation will fail to succeed the business to the next generation. Of those successful family businesses that are passed to the second generation, only 10% of those businesses will successfully transfer ownership over to the third generation. These percentages show that the transfer of ownership is complicated and can arise many conflicts within the family and/or business.
