For any entrepreneur or business leader, running your own company brings with it many burdens and a whole lot of responsibility. It’s tough enough starting and running a business but running a family business can be on another scale where the burdens, responsibilities and complexities can be exacerbated.

There are two things that a business owner can carry: baggage and luggage. Baggage can be considered the things that aren’t useful and hold your business back, whereas luggage is the stuff that we can use effectively and benefit from. If your family business has been operating for a while, perhaps for a number of generations, baggage such as workforce complacency, bad habits and old methods, may have accumulated and be difficult to shift.

As the leader of an owner-managed business, there may also be other baggage that isn’t so obvious, for example; expectations, relationships and responsibility. A lot of the time these do not get accounted for, but they can be equally if not more destructive than the accumulated baggage. Of course, all businesses have to deal with expectations, relationships and responsibilities from the moment of inception but it’s clear that these can be made harder when they have to be dealt with inside a family enterprise – you can change your staff but you can’t change your family.

Luggage on the other hand is the stuff that comes into good use for a founder, following or future generation. Luggage such as the values, experience, lessons and support is beneficial for someone running a family enterprise and should be used to lead the company towards their goals. It’s vital to be aware of both baggage and luggage so that lessons can be learned from the baggage and the luggage can be used efficiently.

The Challenges to Family Enterprises

Some of the challenges have already been briefly mentioned above, such as relationships and expectations (and the fact that family are family), but there are three overlapping challenge areas for a family enterprise: family challenges, personal challenges and business challenges.

According to stats and figures from Families in Business, the two main challenges within these areas are:

  • Family dynamics and relationships
  • Succession

The purpose of the business is vital for growth and moving forward, but incredibly 0% of families all agree on the purpose of their business, which is where challenges can arise with family dynamics and succession. Perhaps this isn’t so startling considering we are talking about families, but there is always a way to overcome a challenge.

How to Deal with these Challenges

The best way to deal with baggage is to be as open as possible and tackle challenges with structured communication. As a family or owner-managed business, you need to have clear values and goals that can be achieved as a team. If there is an elephant in the room, it’s best to say hello. Sometimes it is easier for some families to get a third party involved who can facilitate a structured discussion which often leads to smoother and more valuable conversations.

At Gorvins our Family Business team are incredibly well-equipped to help owners when it comes to the legal aspects of their company. It’s always best to get ahead of the game and plan for the future; proactive rather than reactive will save you time, money and your mental state.

Here are the ways you can address the two main family challenges:

  1. For family dynamics and relations creating a partnership or shareholder agreement will define your relationships. Such important documentation can prevent disputes and arguments from arising in the first place as business partners can consult these in order to resolve problems. If things do start to turn sour without a shareholder agreement things can get terribly messy and very expensive, very quickly. Around a third of owners don’t believe that shareholder agreements are necessary, but I bet 100% will think they’re important after they’ve had a shareholder falling out.
  2. To deal with the challenge of succession, the best way forward is to make a succession plan. A well-tailored succession plan will help to address issues related to both ownership succession and management succession. A lack of forward planning and vision is often the downfall of a family business. Our dedicated team will help you to think about your most important commercial and personal goals and subsequent business transition. No stone will be left unturned in what will be perhaps your most important business decision.

To get in touch with one of our expert family business solicitors, call us on 0161 930 5151 or send an email to

Let our legal experts contact you

Contact us today!