Have you ever had an argument with your siblings or cousins about who has contributed more to the family business? Do you even have brothers and sisters in your business, or are you alone out there? If this sounds familiar, the MBA for family business applicants could be for you. Let’s have a look at what family businesses are like and why it is so hard to evaluate who is contributing most. We will then do a deep dive into the MBA for family business professionals, and evaluate the pros and cons.
A family business is a business in which majority of the shares or ownership is with the family members. A family business can be a small sized firm, a large sized business, or even a corporation. In fact, there are more family businesses than non-family businesses across the globe. Family businesses are not like other companies. This may seem obvious to those who have grown up in one and more surprising for those working at a large conglomerate. The way family businesses operate is different because the people involved are different: they are both owners and employees at the same time.
The difference between family businesses and other companies goes beyond the fact that a family owns it. Family businesses tend to have a more personal atmosphere, since they are usually small-scale and employ familiar faces. Family members may also bring their other family members in as part of the workforce – without any formal HR process. Working in a family business therefore has its perks: you get to interact with people outside of work and feel like part of the “gang”.
Most family businesses are organically grown, and in the Asian context, many have even grown without venture capital. While it is understood that successive generations will ultimately acquire executive responsibilities in the business, family businesses too are changing rapidly now. Today, members of the new generation joining the family business want to often professionalize and diversify it. ‘Business as usual’ is no longer the accepted mantra, even at businesses with millions or even much more in revenue. With the new generation looking for new skills and capabilities to add new avenues to the family business, the MBA has a definite role to play. The MBA for family business professionals isn’t just another degree, but much more. Let’s see how.
How can the MBA help family business professionals?
Family business professionals often assume that an MBA is not for them.
“I do not need to improve my general management skills,” they say. “I already have a family business.”
“My father owns the business and he is unlikely to retire any time soon, so why would I bother with an MBA?”
“I can get everything I need from the internet — there is no need for me to spend two years at school.”
Yes, it makes sense to take advantage of your family’s expertise, but you can also benefit from pursuing an education in business outside of your own company. After all, how many of your competitors have access to information about the market, customers, or other companies in the industry? You may find some interesting facts at trade shows or conferences, but what if your competitors are speaking at these events? Would you even be able to tell the difference between fact and fiction? Moreover, while many family businesses do retain top talent by promoting from within, those who come into your industry from outside may have a different perspective that could be valuable.
In the world of family businesses, the idea of an MBA is often scoffed at. Family business professionals may think that an MBA is for people who want to make money in banking or consulting; people who have no interest in working in a family business. They may think that the knowledge and skills acquired from pursuing an MBA are not relevant to them. While most family business professionals may assume that they do not need an MBA, in fact, an MBA can provide multiple benefits to them.
Family business professionals don’t need to be owners to benefit from an MBA. They can be managers, trusted advisors or other leaders in the organization. No matter what your position is within the family business system, an MBA is a great way to build the skills and get the knowledge that you need to grow into new roles and responsibilities. An MBA can also prepare you for working in non-family businesses and even help you create your own business if you ever decide to leave the family business.
The quintessential benefit of earning an MBA is the opportunity to learn about all aspects of management. Most family business professionals are successful because they learned about their industry and their respective roles within the companies, but for the most part, management was not part of their education. However, to be a successful leader and manager in one’s own company or within the family business, it is important to understand how organizations work and how teams function.
An MBA provides a holistic view of all aspects of management so that students can be well-rounded leaders. Whether you’re a junior or senior family business professional, there will always be something you don’t know. A good MBA program will expose you to concepts, theories and frameworks not only in traditional business disciplines like finance and marketing, but also those that are more specific to family businesses such as succession planning and governance. An MBA allows you to learn about new and different industries, which is especially important for family business professionals who are looking to expand into other areas or provide additional services or products. An MBA also opens up opportunities within other industries for candidates who want to change career paths or want a second career option after transitioning out of their current role within the family business.
Family business professionals should have a specific post-MBA goal in mind
It’s important to remember that there is no one-size-fits-all MBA program. Not all schools offer courses on family business; some classes on entrepreneurship may only focus on start-ups rather than family firms; some programs may be more quantitative while others more qualitative in nature. This means that before you apply for an MBA program, you need to do your research properly.
The typical MBA environment will also introduce you to new career paths and industries — so even if you want to stay with your family business, having this exposure is useful. But remember that the MBA is not vocational training: it won’t teach you the ins and outs of making widgets or running a production line.
If you are already in a position where you manage people or departments, then an MBA will help you develop as a leader. Most programmes include some personal development elements, but some also offer more advanced coaching and leadership modules. For example, IMD offers an ‘Intensive Leadership Development Programme’ that lasts three full days to help participants reflect on their leadership style and behaviour.
A good way to test out an MBA school is to join a student club or committee because these are the places where leaders rise up quickly and put their skills into practice. You can also participate in competitions — for example, through INSEAD’s Global Family Enterprise Case Competition.
Family Business MBA applicants need to show relevance to full-time MBA programs
To get the lowdown on what kind of characteristics and background you need to be a successful applicant to top MBA programs, we spoke with some former admissions officers and current MBA students who have worked in family businesses.
You will want to demonstrate that your family business is relevant to your application and admission into an MBA program. You will also want to be able to articulate why you are applying for an MBA and how an MBA will help you achieve your goals.
MBA admissions staff are looking for more than just a pedigree and fancy job title. In fact, many applications from family business members might only mention their family business in their resume, which is no different than anyone else’s application. It’s not enough anymore!
Like all applicants, you must be able to show them that you have made a significant contribution in your field – especially if it is within your family business. How much responsibility did you take on? Were you developing new products or services? Did you lead a large team? What was the size of the annual budget or revenue that you were responsible for? How did the results compare against industry standards or competitors?
You may also want to consider what transferable skills you bring to your future (post-MBA) roles if you do not plan to return to the family business after the MBA.
The MBA is a broad-based management degree. If you’re applying to business school with your eyes on a family business, you need to prove that an MBA is relevant to you.
You have three choices here:
You can explain how the family business is going to be your future employer and show how much your education will help the company.
You can show that you’ve been working in the family business in a management capacity and explain why an MBA would help you do an even better job.
You could argue for some kind of “strategic break” from the family business after graduation, taking your skills elsewhere for a few years before returning home.
Family business MBA applicants struggle with specific aspects of the MBA application
Family business applicants have a lot to offer, but they struggle with specific aspects of the MBA application process:
- The family business applicant has had an unusual and often very successful career path, making it difficult for them to explain their decision to change direction or apply to an MBA program.
- Family business applicants are sometimes reluctant to share information about their family or about their business because it is often considered private or confidential.
- Family business applicants often focus on the positives of the family business experience, but this is ineffective in convincing the admissions committee that they are ready for the MBA.
- Identifying the right recommenders can be a big challenge. You can’t have your dad or your uncle as your recommender, and most professional managers working in the business probably report to you or are at least within your clear influence because you are part of the owner family.
- Expressing post-MBA goals that simply involve ‘expanding’ the family business can seem too inward-looking and vague.
Family business MBA applicants should therefore plan well in advance for their MBA applications to tackle these aspects.
There’s no denying that the MBA is a powerhouse degree for anyone looking to kickstart or re-launch their careers. However, the specialized nature of family business management means that it necessarily comes with its own unique set of challenges for potential students. It may not be for everyone, but for those looking to pursue it, appropriate planning is key.
Top MBA programs for family business applicants to consider
While there are a number of top MBA programs that continue to add courses focused on family business management, the following schools have a specific focus on this area:
- Kellogg School of Management
- The Wharton School
- Columbia Business School
- UNC Kenan-Flagler
- Cornell Johnson
- MIT Sloan
There are also dedicated programs in family business management offered by Kellogg, Harvard Business School, Columbia, IMD, INSEAD, IIM Bangalore, IIM Calcutta, and Indian School of Business. These programs are usually not MBA programs, but they do focus exclusively on family business issues and are taught by top business school professors.
Thankfully, business schools are starting to realize that family business experience can teach students plenty about how the real world of business works. The MBA for Family Businesses professionals is a great start, and there will soon be other programs as well. The more schools embrace family businesses as a legitimate area of study, the happier graduating students will be—and that’s good for business owners who need access to top talent, even if it is from within the family!