3 Ways to Overcome Challenges in Family Business Management

In this article, we’ll look at what family businesses are, their unique challenges, and how these issues can be prevented and resolved.


Managing a family business can be challenging.

Personal differences, family conflicts, and entitlement can all pose massive challenges to achieving success and building the legacy you desire.

To help families effectively run and manage their companies, MANCOSA offers a Postgraduate Diploma in Family Business Management course. With it, you’ll build the skills and knowledge you need to ensure your family business grows to new heights.

In this article, we’ll look at what family businesses are, their unique challenges, and how these issues can be prevented and resolved.

What is a family business?

As the name suggests, family businesses are companies owned by a family, which passes down the family tree from one generation to the next.

However, contrary to popular belief, not all family businesses are small. Some are pretty big and can evolve into massive organisations.

For example, the luxury brand BMW was founded in 1916 by Günther Quandt. It originally started as a relatively small aeroplane engine company but, over the years, has evolved into one of the largest luxury manufacturers in the world.

While the company has gone through many names and transitions, family members still hold controlling shares.

Often, family members are key decision-makers in family businesses, with a range of staff members and employees working for them. These businesses exist across many industries, from retail, automotive, electronics, and many more.

Some other popular family businesses include Pick n Pay, Ford Motor Company, Samsung, Estée Lauder, and Dell.

Common challenges faced by a family business

While family businesses hold many benefits, there are also some challenges to be aware of. Some of the most common challenges include.

Emotions and family conflict
One of the main challenges of running a family business is that emotions will always be involved. It can get personal quickly.

For example, if your uncle (your co-boss) reprimands you for not handling an employee situation right, you’re much more likely to take it personally than you would if he wasn’t related to you.

Personal issues in the family may also arise, which could carry over into the office. Perhaps your mother and aunt got into a fight, and now it’s creating a sour atmosphere at work. Thus, family issues need to be resolved outside of work hours.


Some family members may have different roles when family businesses are passed by inheritance. You’ll have those who:

  • Are actively involved in leading the company
  • Passive owners
  • Are employed in non-management roles

A common problem that may occur is that these family members feel entitled to a return on their equity in the form of dividends, and they may also expect to be hired into positions they’re not qualified for.


For family members who live and work together. Routines, processes, and work ethics may become repetitive.

When a family lives by the same standards and beliefs, it’s difficult for the business to evolve into “new territory”. It can put a cap on creativity within the company. Furthermore, family members may get tired of seeing each other all day, every day.


Implementing discipline and fairness in a business is exceptionally hard when family members get second chances while other employees don’t. They may have job security regardless of their behaviours and failures, which could create a negative company culture.

The opposite can also be true in some instances where family members are held under stricter rules than other employees — which could create bad blood between family members.

Strategies for Family Business Management

While many challenges occur, these issues can be prevented and managed in several ways. The fact is that African family businesses should act now to secure their future. Here are three strategies that you can use for effective family business management.

1. Communication and conflict resolution

Communication in the workplace is crucial for success. An effective communication and conflict management plan can save your business time and money and improve productivity and employee retention. To do this, you should:

  • Address issues immediately and openly: Instead of ignoring the conflict between family members, act fast to solve the problem before it gets in the way of productivity.
  • Set clear expectations: Make it clear to family members that they’re held to the same standards as other employees. Communicate your expectations clearly to them so they know where they stand from the start.
  • Recognise and respect personal differences: People are different — regardless of whether they’re family or not. If clashing personalities and viewpoints cause many issues within the company, teach your employees to be more aware of personal differences and accept that everyone has their own opinions and way of working.

2. Succession planning and handovers

Ineffective transitions of leadership and unexpected circumstances can significantly impact processes and productivity — possibly jeopardising the long-term success of your family-owned business.

Thus, when planning your exit strategy, you must ensure you prepare for any problems that may arise in a legal, financial, or operational sense.

  • Operational considerations: Consider the issues that may affect the daily or overall operations of the business. Is there any specific training you need to provide to your successor? What exactly will your successor be responsible for?
  • Financial considerations: Consider the financial risks of the company. What are the tax implications? Are your insurance policies up to date? Are you gifting the business to your successor?
  • Legal considerations: Consider legal issues that may occur. Are there licenses that need to be transferred to other people? Do you need a legal document that outlines the terms of the succession?

3. Adopting change and innovation

Change in the workplace can be uncomfortable as you adopt new ways of thinking and working. Yet, without change, a business risks stagnating and being overtaken by competitors.

That’s why your family business needs to be innovative and allow new opinions and processes. You need to implement new things into your business, such as technological changes, focus, diversity, and structures.

In other words, don’t fall so in love with your company as it is that you don’t want to make any changes — even when necessary.

For example, some of the most current developments that you can incorporate into your family business include:

  • Automation
  • Cross-functional collaboration
  • Repeatable solutions
  • Inclusion

Register for a Postgraduate Diploma in Family Business Management

If you want to see your family business succeed and build a legacy for generations to come, having a family business manager is vital. Learn more about our Postgraduate Diploma in Family Business to see if it fits your business.