Jessica Kao, MBA ’17, has always known that she might go into her family’s health care business, but the question remains: If the right opportunity arose, should she? At MIT Sloan School of Management, she found some classmates who were also interested in the rewards and challenges of running a family business, and last spring they founded the MIT Sloan Family Business Club. The club seeks to draw together students of diverse backgrounds to strengthen the network of businesses that are family and privately owned.
“When you are thinking of running a business that involves parents, siblings, and multiple generations, there’s a lot to consider,” Kao said. “So, the main reason for the club was to have a community of other students at Sloan who have that interest and want to be able to have a dialogue about that decision … and what it’s like working with family.”
In addition to Kao, the club was co-founded by MBA ’17 classmates Jose Alvarado, Courtney Brown, and German Toro, all of whom are connected to family businesses. Kao’s parents founded BioSys Laboratories, a California-based medical diagnostics and disposables company; Alvarado’s family owns and manages Alimentos POS-3, a Venezuelan snacks company; Brown is a fourth-generation member of the family that founded National Freight Industries, with more than 200 locations nationwide; and Toro’s family owns and operates Industrias Corpanal, a Latin American-based personal care products manufacturer.
Kao recently answered some questions about the club’s goals:
What constitutes a family business?
A family business is any enterprise in which a family owns a significant share of a company and can influence important decisions, such as the election of the chairman and CEO.
Why does MIT Sloan need a family business club?
Family business management has become increasingly important as second- and third- generation family members seek to transition into their family businesses. According to McKinsey & Company, family-owned businesses are expected to represent nearly 40 percent of the world’s large enterprises by 2025. Therefore, it is imperative for MIT Sloan to provide dedicated support to strengthening its network of family and privately owned businesses.
What challenges does a family-run business present for the family or for others involved?
Family-owned enterprises often operate with greater accountability and create value over longer time horizons. However, family-owned businesses also face unique decisions beyond what a traditional company faces. As family businesses transition from generation to generation, the number of active business partners grows exponentially, complicating succession planning, governance board selection, and conflict management, and decision making among family members.
How will the club help MIT Sloan students address these challenges?
The club held its first meeting last spring, and plans to provide educational programming, topical seminars, and networking among classmates, faculty, and alumni. We are a community of students with this common interest in family businesses, and we facilitate connections among our members so that we can learn from our experiences. The club plans to connect students to external resources, such as family business consultants, and make treks to local family businesses.