Family companies in any country can be categorized based on the stage of family and ownership. An analysis of family business system development in 1997 led Gersick, et al to create the Three Stages of Development of the Family Business, first published in the book Generation to Generation: Life Cycles of the Family Business. This framework illustrates the typical categories and path that a family company moves along over time. It provides a way to understand the strengths and challenges of family companies at each stage so we can be more prescriptive about how families can prepare for the future.
Most family businesses start at the Controlling Owner stage with one owner (or one owner and his/her spouse) having ownership control. A family business can stay at the Controlling Owner stage for many generations if ownership remains consolidated in one person or a married couple. At this stage, the family is typically small, and family relationships can be intense. The business is almost always in the center of the family's life. The founder is impressive, builds a lot of value and is typically at the center of activity, often regarded as indispensable.