Family business
A family business is a company in which one family holds enough ownership to control it and intends to keep that control as leadership passes from one generation to the next.
There is no single legal definition of a family business. Most working definitions share two features: one family controls the company through ownership, and it intends to pass that control to the next generation. Some definitions also require family members to work in the business or sit on the board.
The size of the company does not matter. A family business can be a local car dealership or a manufacturer with thousands of employees and an independent board.
What sets a family business apart is that three systems overlap: the family, the ownership and the management. A single person can be a parent, a shareholder and a CEO at the same time, and the same conversation at dinner can touch all three. That overlap is a strength when everyone agrees and a source of friction when they do not. Much of family governance exists to keep those roles distinct. Boundaries between family and business looks at where the lines usually blur.
Family business or family enterprise?
The terms are often used interchangeably. Where a distinction is drawn, a family enterprise is the wider set of everything the family owns together, which may include several companies, real estate, investments and a family office. The family business is usually the operating company at the centre of it.
Why it matters for the successor
A successor in a family business is not only taking over a job. They are taking over a role the family, the employees and the board have watched someone else fill, often for decades. The people they will lead knew them first as the owner’s child. That history is why preparing the person matters as much as preparing the structure, as why family businesses fail in the second generation explains.