22 March 2017


Family businesses account for about 75% of organisations worldwide and constitute a singular business that often faces unique challenges on several frontsownership, maintaining relationships both within the family and between the family and management, succession planning and corporate governance.

In general, three critical areas can be distinguished in understanding and managing family business:

  1. Personality - especially that of the owner and successor
  2. Structure - relationship and family attachment to the business
  3. Business - it is often unclear whether the success or failure of the business is due to business factors or family dynamics

This distinction leads us to understand the major challenges that family businesses face and overcome:

  • Resistance to change: Family businesses often live in the past. Generally, the habits and methods of the founder become sacred writ and can hinder the business when faced with new situations
  • Modernising obsolete skills - many family businesses are reluctant to adopt new technologies or methods. The common mantra is 'we have always done it this way' and they refuse to update systems and methodologies.
  • Managing transitions - for a family business there is nothing more important than the transfer of power when the founder leaves his role. If this transition does not take place properly, the business can fail very quickly.
  • Raising funds - in comparison to listed companies, family businesses have several limitations in acquiring the necessary funds to expand
  • Emotional factors - can often interfere with good business conduct
  • Leadership - second and third generations often lack leadership appropriate to today's business world

To overcome these difficulties, it is desirable to include people outside the family in the Board of the organisation, assume external talents and try to keep the vision of the family in the creation of a corporate identity and a consequent succession plan.