You are currently viewing FAMILY BUSINESS MANAGEMENT



Family-owned businesses account for two-thirds of the world’s businesses and generate most of the world’s employment, economic output, and wealth. While family businesses on average outperform other types of enterprises, they face several potential drawbacks arising from the mix of family issues with business issues. Hence, for the good health of the business and to foster a family relationship, there is a need for family business management.

This post will take you through some key issues that may arise from family-owned businesses, what family business management entails, how it can be of help to business owners, successors, and the whole family at large among many others. Note that this article is only a general guide as regards family business management. I suggest you always seek appropriate professional advice on your particular circumstances before taking any action.


Families are complicated emotional entities with a variety of dynamics and relationships that involve a whole range of issues other than the business. When families are involved in a business, personal and family issues can interfere with how business decisions are made – either in the best interest of the business, in the best interest of the family, or somewhere in between. Emotions and conflicts may also arise having little to do with running the business and are likely to impede operations. Even if no obvious conflict exists, older generations may be hesitant to let go for fear of losing their leadership role in the family.

Furthermore, employee management and teamwork are often made more difficult to achieve by the relatives of the business owner employed without regard to their talent. Due to family relationships that played out at work, business growth may be thwarted when relatives are in positions to hold back the business, or there is a high turnover rate among good, non-family employees.

Unlike other businesses, some key issues that play out in a family-owned business include, the selection and preparation of a successor, inflexibility among family members, Excessive nepotism, diversion of resources, dilution of interest, relationship between family members, and funding lifestyle among many others.

Nobody appreciates reprimanding staff, dealing with performance difficulties, or having to terminate someone. In family businesses, assumptions are made unlike those made in other businesses.

Consider statements like, “I don’t have the same rules as non-family-member employees”, “they’ll understand if I have to stay home with my sick child”, or “I won’t get fired since I’m part of the family.”

Imagine what it would be like if this employee was your sister, brother, aunt, cousin, or uncle. Or imagine how difficult it would be if your brother-in-law who works for the family business is divorcing your sister.

These and other similar challenges are like road potholes, and they often kill a family business. Any type of business should be managed as a serious entity rather than as a hobby, whether it is a family-owned business or not.
Having said all that, here is where family business management comes in place.

Nature Of Family Business Management

Family business management is important due to the heightened emotions and confusion that arises in the absence of the business owner. It is targeted at family-own businesses looking to sustain, scale and grow their businesses. It helps to understand how to capitalize on the strengths, navigate various challenges, and guard against the weaknesses of businesses and the owner’s families.

Family business management also helps you evaluate the state of your family businesses and gear you towards accelerating your business to the next level.

Managing a family business can be one of the most rewarding, and challenging tasks you will ever undertake. It can be done successfully or otherwise. However, its success starts with the family member(s) in the business having the right attitude. It will help to minimize inner fighting and bickering among family members and make for a more profitable and long-term family business.


Managing a business isn’t a simple task, let alone a family-owned business. Many businesses experience failure within the first year when not managed properly. Whether you are a business owner bothered about the future of your business, or you’ve just been handed the golden sceptre to manage a family-owned business and want to avoid failure, I’ve carefully outlined some tips below to help things go smoothly..

• Establish work and home boundaries – Managing a family business can be a challenging task since you must ensure that the business runs efficiently while also maintaining familial relationships. The distinction in roles and responsibilities at home and work should be clear. While family relationships and interests are the prime concern at home, the success of the business must be paramount at the office. Resolve to only handle work-related things at work and handle family matters when you’re off the clock. Maintaining those important boundaries can save you from a lot of problems and help keep you sane.

• Prepare the succeeding generation for management – Business owners must ensure that there are regular family meetings where the short- and long-term goals of the business are discussed. A family meeting is a place for the older generation to communicate the values upon which the company was founded, and for successors to express their readiness to manage it. The family meeting provides an opportunity to identify which protégé can be groomed as an heir and can serve as a launching point for the delegation of management responsibilities. Additionally, a family business must formalize communication among family and non-family employees. Outside advisory council or consultant serving as a sounding board should be formalized too.

• Staffing key positions: Always try to hire an experienced candidate for key positions such as a financial controller, as sometimes these types of positions require a lot of expertise and prior knowledge. Posting a family member in one of these positions who are ill-qualified can be disastrous for the entire business.

• Family disputes should be kept at home – Never let family issues spill over into business matters or vice versa. Always maintain a professional demeanor when discussing business with family members. Treat them just as you would any other employee. But once you’re out of office, you should engage with each other like normal families. Instead of making it a time for another family board meeting, dinner tables could be a place to address family matters.

• Set up a business plan – When families work and play together, it can be difficult to differentiate the business from leisure. However, successors of a family business should deal with these challenges regularly. A good way to do this is to set up a comprehensive business plan that covers the daily obligations and responsibilities of every family member actively involved in running the business. In a situation where, family members do not follow the policies, rules, and laws, this plan will relieve stress and pressure on management staff. Similarly, those who choose to slack off and not do their fair share of the workload will essentially write their reprimand or admonishment.

• No preferential treatment – It is human nature to tend to empathize with your family members. After all, you know them very well and have added insight into their thoughts and feelings, but that extra empathy could lead to problems on the job. That intimate family knowledge may make it more difficult to make logical and smart business decisions since you could be more inclined to judge related employees less harshly than non-related workers. You may feel tempted to not sanction a cousin for lateness since you know that he just had a difficult breakup. But giving family members special or preferential treatment can only lead to problems.

• No special privileges – In family-owned businesses, sometimes family members can overstep their boundaries. They may think it is okay to use company tools or request special services. For instance, it is unfair to ask non-related employees to do special things for family workers. You hired them to work for your company, not to be a private servant to your spouse, parents, or children. It also creates the problem of mixing personal family needs with business resources, the practice is extremely unprofessional and it drains time and funds from your work.

• Find a business mentor – When your sister fails to show up for work and you discover your nephew is skimming money from the business’s account, you’ll need someone who will guide you on the best step to take. Find someone you admire who has successfully run a lucrative family business for at least ten years while maintaining positive relationships with their family and staff.

• Set contract of employment – In most family businesses, a majority of the staff comprises relatives and close family members. Each member of the family involved in the business should have an employment contract that explains their obligations and what is expected of them

Final thought

Managing a family business isn’t for the faint-hearted. It requires backbone, fortitude, and a whole lot of courage to make tough decisions to ensure the survival and profitability of the business rather than focusing on the family/family members. Family members must understand and commit themselves seriously to the business just as they would to punching the clock of an outside company.


In the world as diverse and bright as ours is, news of all kinds come in every single minute of the day... So, we’re always trying hard to supply all of our readers with the most socially important and popular news!

Leave a Reply

Sign up to our newsletter!