Family businesses are an integral part of the global economy. These businesses are owned and operated by family members and are known for their unique family-oriented values, traditions, and culture.

According to Wikipedia family businesses are often classified in three ways. There are first-generation or founder firms, sibling ownership, and lastly a family consortium.

Despite their many advantages, family businesses face several key challenges that make it difficult for them to succeed and grow. In this blog post, we will explore some of the key challenges facing family businesses today and mainly a lack of formalisation and systemisation.

I am sure you will agree that one of the main challenges facing family businesses is the lack of formalisation. Because many family businesses are started as small, self-employed businesses, they lack the same level of management structure, company policies, and procedures that larger, more established companies do. The lack of these systems makes it difficult for family businesses to grow exponentially, develop new products and services that the market wants, and attract and retain the best employees.

A strong attachment to family-specific traditions and culture cultivates an environment that often makes it more difficult for them to implement new technologies and or business improvement practices, which puts them at a disadvantage when compared to their competitors.

Succession Planning

Succession planning is another major emotional challenge that family businesses face. Many family businesses are legacy businesses passed down from generation to generation, which can create several issues.

For example, selecting a successor or CEO from the pool of family candidates can be a complex process, as family members will have different skills, interests, and aspirations. In addition, there may be conflicts over the distribution of shares, and accountability to drive the strategy of family members and this may lead to family conflicts and disputes.

Succession planning is also complicated by the fact that family businesses often have a strong emotional attachment to their business. This can make it difficult for family members to let go of control, or select the best person for the role, even when it is in the best interests of the company.

Family Dynamics

Family dynamics can also pose a significant challenge for family businesses. Because family members are often involved in the business, there can be interpersonal conflicts, power struggles, and issues with communication. In addition, family hierarchy can create challenges, as often younger family members may feel that they are excluded and are not being given a fair opportunity to contribute to the business.

Family dynamics can also make it difficult to separate family and business matters. For example, family conflicts at home may spill over into the workplace, or family members may use the business to resolve personal conflicts.

Financial Management

Financial management is another area where family businesses can face challenges. Because family businesses are often started with personal savings or loans from family members, there often is a lack of formal financial reporting and accounting practices. In addition, family members tend to mix personal and business finances, which can make it challenging to track profits and losses.

Family businesses may also have limited access to external financing, which can make it difficult for them to fund growth or invest in new technologies or products.

Marketing and Innovation

Finally, family businesses may struggle with marketing and innovation. Because family businesses are often focused on their traditions and culture, they may be resistant to change. This can make it difficult for them to adapt to changing market conditions or to develop new products and services.

In addition, family businesses may have limited access to external expertise, which can make it difficult for them to stay up to date with the latest marketing and innovation trends.

Founders Syndrome

Marcus Coetzee, in his article on the Founder’s syndrome dated, 19 April 2021 discusses this phenomenon and describes it as “this occurs when a founder struggles or refuses to ‘change gear’ and adopt a new mindset, approach or skill set as the business grows”.

When an organisation reaches a certain stage of complexity the founder’s syndrome is inclined to surface. Often the founder is incapable of leading the business through a significant change in direction from their original vision. This could stunt the business growth and must be resolved immediately.


Family businesses are an important part of the global economy, but they face a number of challenges that can make it difficult for them to succeed and grow. These challenges include the lack of formalisation, succession planning, family dynamics, financial management, the Founders Syndrome, and marketing and innovation.

Addressing these challenges is essential for the long-term success of family businesses, and requires a combination of strategic planning, effective communication, and a willingness to adapt to changing market conditions. Yes, this is also where a business coach and mentor could assist the business with defining a clear view of the future to ensure the growth momentum is maintained and that the best decision for the business and ultimately the family is achieved.

Despite the challenges, family businesses have a bright future and will continue to play an important role in the economy for generations to come.

To discuss the above challenges in your family business, and to see if you qualify, call me today for a complimentary business coaching session at 082 320 6072 or email me at

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