Entrepreneurship in the family office

http://www.ifb.org.uk/ Family offices, perhaps driven by the need to support an expanding shareholder base, are turning more to entrepreneurship. This theme emerged at the recent IFB 7th Annual Family Office Forum Roundtable chaired by Family Office expert Daniel Goldstein.

While entrepreneurial activities are inherently risky a ‘stay rich’ approach will not usually generate big enough returns to create significant new pools of family wealth. Family offices face other pitfalls, such as a lack of new ideas or over investing, sometimes leading to stagnation or decline.

There is also the risk that family members become over dependent on dividends and are lulled into complacency and a false sense of financial security. Balancing a traditional financial investing strategy with an entrepreneurial approach can therefore play a central role in giving the family office a new lease of life.

A good starting point is setting out the family’s values - particularly making explicit the family’s appetite for risk taking. Keynote speaker and family adviser Francois de Visscher (pictured left) encouraged families to reach beyond ‘outer wealth’ such as assets and find ‘inner wealth’ embodied in the family’s values and legacy.

When successful families put family office entrepreneurship into practice they encourage those next generation family members, who have the passion, knowledge and drive, by lending them moral support and resources.

Once embarked on its entrepreneurial strategy the family office must stay focused: one boss, one team, one board for every project or investment is the answer according to one successful family. Failure should be expected, but as long as lessons are learnt it is not the end.

By each family office discovering its own entrepreneurial strategy not only can wealth be created, but family values will be sustained potentially paying rich rewards over the long-run.

The enterprising family office

http://www.ifb.org.uk/ London is becoming home for an increasing number of family offices. A family office generally refers to a private company that manages investments for a single wealthy family. The company's financial capital is the family's wealth, often accumulated over many generations.

At a recent gathering of the IFB Family Office Forum owners were privileged to hear from author and consultant Mark Daniell who wrote Strategy for the Wealthy Family and other acclaimed books. One of Daniell’s themes is why only one of the 30 wealthiest families in the first edition of the Forbes “Rich List”, the Rockefellers, is listed today whereas the other 29 families have dropped away.

At the heart of growing the family’s wealth, and not just preserving it in the family office, is the need to maintain the entrepreneurial zeal and appetite to innovate and grow in each generation. Keeping this flame burning begins by instilling behaviours into the next generation that will encourage them to take entrepreneurial risks and make their own mark. The best family offices foster core values in the family such as dignity, accomplishment and responsibility.

Whether family office investments are made up of operating, or financial assets, the key to longevity is the positive engagement of the next generation. If the family business has been sold there could, of course, be a loss of identity so agreeing common values among owners and a shared mission becomes critical in order to retain unity and a sense of purpose. Recent IFB Next Generation Forum speaker Ben Goldsmith, who now chairs his family office, also highlighted the importance of strong leadership as another vital ingredient.

On September 28th when the IFB hosts its annual Family Office Forum Roundtable families will share their own experiences on how enterprising businesses manage to keep the entrepreneurial flame burning and grow their wealth. The debate goes on….