abstract
- Families who own and operate a family business face unique challenges when measuring the achievement of their individual and family-wise goals through corporate financial indicators. These firms comprise approximately 70% of the global gross domestic product and 65% of employment; local economies benefit by improving their financial and inter-familial decisions involved in new investments. While corporate finance strives for maximum enterprise value, small family business owners are generally more interested in cash flows and dividends. While corporate finance literature covers the company's investment decision-making process, scant literature covers individual and family investment measurements. This paper addresses these challenges and proposes a decision-support tool for stakeholders, individuals, and families to invest in their businesses as a systemic triad. The purpose is to maximise both business and individual values. This work builds upon accepted engineering economics valuation methods and incorporates analysis from family business management and accounting practice. It aims to develop a standardised method for valuing an individual and a group's decision to invest in their company as equity or capital expenditures by each system component in isolation or as an interaction. This work concludes with a decision-making tool for valuing investments by the systemic triad: individuals as shareholders, family as individuals behaving as a group, and their business. The contribution is twofold: a stakeholder investment framework and a numerical illustration highlighting its benefits; the method allows financial decisions with better involvement of family members and their personal goals. © 2024 The Authors.