Ownership in a family business can be a rewarding and important role. It means stewardship, protection and nurturing the family business. As a guide for shareholders, this book will develop understanding and insight into the role of becoming more valuable as an owner, not just financially, but intellectually and emotionally as well. 'Knowing when and how to be involved in a family business can be a challenging task...shareholders need to know what their role is to make them effective and make their family businesses profitable now and for the future. If you want to be a 'good' owner - this book is for you.' - Philip A. Clemens, Chairman & CEO, Clemens Family Corp. 'If you are associated with a family business, you need to read this user-friendly primer. Not just family business owners, but indeed everyone even remotely connected to a family business will want to read this. Family Business Ownership: How To Be An Effective Shareholder is a much needed and superb addition to the already excellent Family Business Leadership Series.' - Bill Lucas, Laird-Norton CRAIG E. ARONOFF Co-founder, principal, and Chairman of the Board of The Family Business Consulting Group, Inc., the founder of the Cox Family Enterprise Center and current Professor Emeritus at Kennesaw State University, USA. He invented and implemented the membership-based, professional-service-provider sponsored Family Business Forum, which has served as a model of family business education for universities world-wide. JOHN L. WARD Co-founder of the Family Business Consulting Group Inc. He is Clinical Professor at the Kellogg School of Management and teaches strategic management, business leadership and family enterprise continuity. Family Business Ownership How to Be an Effective Shareholder By Craig E. Aronoff, John L. Ward Palgrave Macmillan Copyright © 2011 Family Business Consulting Group All rights reserved. ISBN: 978-0-230-11230-8 Contents EXHIBITS, 1 Introduction: On Being an Owner, 2 What Is a Family Business Owner?, 3 The Power of Cohesive Ownership, 4 The "Ownership Attitude", 5 Roles and Responsibilities: Owners, Directors, and Managers, 6 Preparing and Nurturing Good Owners, 7 Owners by Choice, 8 Managing the Insider-Outsider Dilemmas, 9 Summary, GLOSSARY, SUGGESTED READINGS AND RESOURCES, INDEX, THE AUTHORS, CHAPTER 1 Introduction On Being an Owner If you are a shareholder in your family's business, this book is for you—no matter how many or how few shares you own, whether or not you work in the business, and regardless of how you came by your shares. Being an owner of a family business should be a satisfying, fulfilling, and profitable experience. For some, however, ownership is represented by a stock certificate, a "piece of paper" that has little meaning. For others, ownership leads to grief, conflict, and frustration. Owners who are managers employed in the business may feel unappreciated and may be distrustful of or even disdainful toward owners outside the business. At the same time, owners outside the business may feel treated inequitably, concerned that they aren't getting enough attention, appreciation, or dividends or that information is being withheld from them. Younger shareholders may be confused about their roles and responsibilities and feel inadequate to the task of ownership. Still others may be simply overwhelmed by anything "financial" and try to avoid having to deal with ownership issues altogether. For too many shareholders, being an owner just isn't any fun. But it could be. In fact, it could be one of the most rewarding experiences of your life—and we don't mean just financially. For some individuals, ownership is all about money—the dividends they receive, the frustration they feel at having their funds tied up in the business, or, if they're managers, the stress of trying to improve the bottom line so that cantankerous shareholders are mollified and the business can grow. But, in our view, ownership can mean more than monetary rewards. It can return to you and your family much more—spiritually, psychologically, intellectually, and emotionally—than mere cash. While not underestimating the importance of financial return, we may challenge your ideas about ownership. We hope to offer some insights that can make your experience as an owner take on a whole new meaning and transform your thinking, so that being an owner of a family business becomes one of the most worthwhile aspects of your life. Ownership, at its best, means stewardship—protecting and nurturing the family business and preserving it for the benefit of the next generation of family members and for employees, customers, and the community. As such, ownership can be a vehicle for adding purpose to one's life; for being a better parent, spouse, brother or sister, son or daughter, uncle or aunt or cousin; for enhanced performance as a manager or a strategic decision maker inside or outside the business; and for