What is the three circles business model?

The Three-Circle Model of the Family Business System is a visual representation of the intricate relationships that exist within a family-owned enterprise. This model comprises three key components: the family, ownership, and the business itself. Each of these components is a distinct entity, yet they are interconnected and interdependent.

The model illustrates the complex interplay between these three groups, which often overlap and intersect. This overlapping nature creates seven distinct sectors where individuals in a family business system can find themselves. These sectors represent the various roles and responsibilities that individuals may have within the business.

The family circle represents the emotional and personal connections that bind family members together. This circle encompasses the shared history, values, and traditions that define the family. In a family business, these personal relationships can have a significant impact on decision-making and the overall direction of the enterprise.

The ownership circle represents the legal and financial structure of the business. This circle encompasses the shareholders, their equity stakes, and the legal agreements that govern the business. Ownership is crucial to the success of a family business, as it determines the distribution of power, control, and profits.

The business circle represents the operational and strategic functions of the enterprise. This circle encompasses the products, services, and markets that the business serves. The business circle is where the day-to-day operations of the enterprise take place, and where strategic decisions are made to drive growth and profitability.