Family businesses have existed for hundreds of years and are seen across all industries. Just like any other company or business, a family business faces various challenges ranging from changes in the economy to competition in the market. However, a family business has its own set of challenges that are unique to the nature of the business structure. Let’s see what are the most commonly faced challenges in a family business.


It is very common for family members to request a job in an existing family business and to get a position they do not deserve because of favouritism or just by the virtue of being a part of the family. If they lack the skill and experience which makes them unfit for the job, not only is there a chance they will underperform, but also creates resentment amongst employees who are not a part of the family. To avoid this, a strict policy should be in place that clearly states that only someone who is qualified or trained for the job will be hired into the business.

Separating business from personal life

Keeping business separate from personal life is easier said than done. When family members work together in a business, they tend to expect more flexibility. If a family member is going through a personal crisis, he/she might take the liberty to focus on their personal life more than the business which affects productivity. Also, if two family members have had a misunderstanding in their personal life, it can tend to affect their business relations and decisions. Therefore it is important to leave business discussions at office and personal issues should be resolved away from work.

Lack of an external view

Sometimes, when most decision makers are family members, there is a chance that the thought process is single dimensional. They may not all have the same opinion, but since they share the same upbringing and ideology, they share the same view about the business. It is important for a business to have the view of a third person to give them a different perspective and understanding of the market competition.

Generation problems

When a family business is running for a long time, there may be more than one generation involved in running it. While having a combination of both generations, young and old is ideal for a business, some clashes in ideologies are inevitable. While the older generation has more experience, they are also more averse to experimenting. They sometimes tend to think they are more knowledgeable discard new ideas presented by the younger generation. This can be frustrating for the youngsters who are more tech savvy and want to find ways to improve the business

Succession planning

Very often, the head of the family business spends all his time and energy on the business but does not make a clear succession plan. This can cause major fights in the family that even get dragged to court. In the worst case, without a proper successor, the business ends up in the hands of an incompetent family member which ends up ruining the business that was tended to which such care. Therefore, it is important for a family business to plan in advance who the successor is going to be in case of retirement or death of the current business head