Having worked with many family-based businesses, it is my view that most family businesses choose not to have a formal board because they focus on their perception of the "negatives" of a board and discount the "positives".


From their perspective, a board may make them more accountable (even if only to a board-outsider) and less flexible in "doing business". They may also see the expense of the board as an "unnecessary" cost.

The positives that they discount include compliance, governance, networking, experience, etc.

Where family businesses do adopt a board structure, it is often (but not exclusively) to aid business - to bring in experience, establish business relationships, enhance status (i.e. appointing a "big name") or satisfying stakeholders (investors, banks, etc).

I suspect that family-based businesses will not adopt formal board structures and processes unless they see a significant benefit in it for them - particularly benefits that out-weigh the perceived negatives.