I am presently delivering the Award in Leading a Family Business course and yesterday the session was on the importance of proper corporate governance in Family Businesses. Every family business begins with a dream. It’s a legacy forged in passion, late nights, and shared sacrifice A living testament to a founder’s vision. Yet, for all their strength, resilience, and unique competitive advantages, a staggering number fail to survive beyond the third generation. The culprit is rarely a market crash or simple market competition. More often, the silent killer comes from within, born from the very dynamics that gave the business life: the complex, emotional, and often volatile overlap of family, business ownership and management. The antidote is clear, proven, and vital: proper corporate governance. So why do so many passionate founders and proud owners resist it with every fibre of their being?

They resist because they are guided by myths—dangerous whispers that promise security while paving a road to ruin. It’s time to drag these myths into the light and expose the catastrophic risks they conceal. When confronted with the need to formalise their operations with a proper board of directors that includes independent directors, a family business constitution and possibly even a shareholders agreement and a family council, many family leaders retreat behind a wall of well-worn excuses.

The first and most powerful myth is “We will lose control”. This fear is visceral. The business is their creation, their identity. To cede any control feels like a betrayal of the founder’s spirit. But this is a profound misunderstanding of what governance does. Governance does not steal control; it preserves it. It provides the map and compass for navigating the explosive growth in family complexity that comes with each new generation. Without it, control doesn’t just get diluted; it shatters in a storm of conflict or unchecked power.

Another common refrain is, “It’s just an expensive formality”. Owners see the cost of consultants, meetings, and independent directors, but they are blind to the astronomical price of bad governance, conflict or lost opportunities.

Then there is the myth of secrecy: “We don’t want outsiders knowing our business”. This insular thinking is a trap. It creates an echo chamber where family emotions can cloud business judgement without challenge. The Volkswagen emissions scandal serves as a chilling example of what can happen when a board lacks true independence and becomes obsessed with stakeholder goals at the expense of accountability. Independent directors are not spies; they are unbiased sounding boards, mentors, and mediators who bring fresh perspectives and can prevent a family from making catastrophic, emotionally driven mistakes.

Finally, the most arrogant myth of all: “We’re successful, so why change?”. This is the lullaby of impending disaster. The informal, trust-based mechanisms that work for a founder become utterly inadequate when the family grows. What worked for one generation becomes the very source of conflict for the next, as roles blur, expectations misalign, and fairness becomes a matter of perception rather than policy.

Ignoring governance doesn’t preserve the “good old days”; it guarantees a future of chaos. When rules are unwritten and power is centralised in a patriarch or matriarch, the stage is set for a tragedy.

Look no further than the spectacular downfall of the House of Gucci. What began as a Florentine leather shop became a global symbol of luxury, but behind the iconic logo was a family rotting from the inside out. In the absence of formal governance to manage conflict, disagreements festered into affective, relationship-based feuds. Cousin turned against cousin, son against father. Paolo Gucci secretly recorded board meetings and reported his own father, Aldo, for tax evasion. Maurizio Gucci ousted his uncle to seize control, only to squander the company’s fortune and ultimately sell the family’s last remaining stake. The story ends in betrayal and murder, with the family name stripped from the company they created—the ultimate price for failing to build structures that could contain their destructive emotions. The legal battles that tore apart the Gucci family are infinitely more expensive than any board meeting. Governance is not an expense; it is the most critical insurance policy a family can buy against the self-destruction that unresolved conflict guarantees.

The evidence is overwhelming. Corporate governance is not a bureaucratic burden to be avoided. It is the essential scaffolding that allows a family business to build a lasting legacy. It is the system of the necessary governance forums, like the board of directors, that professionalises strategy, and the family council that preserves cohesion. It provides the formal arenas for communication, the clear policies that manage nepotism and set expectations, and the conflict-resolution mechanisms that prevent disagreements from becoming wars.

To resist governance is to gamble your family’s entire legacy on the naive hope that love, trust, and informal chats will be enough to overcome the immense pressures of growing wealth and complexity. The choice is yours. Will you build a business that is dependent on the fragile harmony of a single generation, destined to crumble under the weight of the next? Or will you invest in the architecture of endurance, ensuring that the dream you built becomes a legacy for generations you may never meet? The future of your family, and your business, depends on your answer.