Developing an ownership strategy within a family enterprise has many dimensions. Formal strategies provide structure, help overcome challenges and address complications that can arise when future generations take over.

I recently spoke with three experts in the field about this: 

• Erick Hamdan, former CFO of Leder Holdings;
• Salvatore Corea, a certified financial planner and certified investment management analyst at Sorrell Financial; and
• Nicole Osolinsky, Canada Tax Partner and Leader of KPMG's Family Office, Western Canada practice.

Here are the highlights of our conversation.

What an Ownership Strategy Needs to Consider

• Leadership of a family enterprise is leadership of a system. It's important to acknowledge that all parts need to work together and that dysfunction in any part of the system, can shut the entire system down.
• Does the family enterprise have a competitive advantage, and what is at the root of it?  What is truly unique to this family enterprise that others can't copy?
• A long term view for the system is key. Another important question for an enterprising family to start with is, are you growing or harvesting? A strategy will differ if there is more of an appetite towards expansion, compared to regulating growth because of the needs of the family.

Challenges that Can Arise in Formalizing a strategy

• There can be blurred lines on who gets to join the business, who gets ownership and if people have to buy in. It is easy for assumptions to be made and this gets even more complicated as the family unit grows.
• Long-term planning is needed. This means defining your objectives, your beliefs and where you want to see the family in 10 years, 20 years and even longer.
• There needs to be separate strategies for the business, the family, the ownership and for non-financial objectives—and they all need to be aligned.
• A formal strategy can help overcome challenges. When people are making decisions, it makes a big difference when they have clarity on the strategic direction of a business. Clarity is kindness.

How Strategy is Affected as the Number of Voices Grows

• Having more family members involved makes the concept of voice and vote even more important. A formalized process needs to hear everyone's input and be clear on how final decisions will be made. 
• Families need to determine if decisions will be made by majority vote or consensus. If it is consensus, will it be at all costs? What if there are strong, differing opinions? The ground rules need to be defined at the outset.
• With more voices, there can be a more of a disconnect between the risk-and-reward thresholds of family members. Some will be more risk-averse than others. When this can be reconciled at the start, then decision making and execution becomes much simpler.