Family-owned businesses, from Pick n Pay to De Beers, have been steadfast contributors to South Africa’s economy for generations. Trust, commitment and shared values give family businesses a genuine advantage, but the same closeness that makes them work can also be what unravels them.
Treat family members like any other staff member
Favouritism toward family creates resentment among the rest of the team. Standard performance measures and a clear chain of authority help, and where possible, having family members report to a non-family manager removes the ambiguity altogether.
Be transparent about succession from the start
Succession is the single most contentious issue in family businesses. Keeping the plan vague or secret only breeds anxiety. A successor needs clarity on the pre-conditions for taking over and a real say in their own career development, and regular family board meetings, separate from formal company board meetings, give everyone a structured place to work through it.
Get outside legal and tax advice early
Objective, external input helps put the right structures in place for sustainable growth and should happen as early as possible, not once a dispute has already started.
Balance the board with non-family members
A board made up only of family members loses the objective testing and challenge that protects a business’s long-term interests. A properly balanced board makes decisions on merit, not sentiment.
Never simply gift the business to the next generation
A business that is formally sold to the next generation, rather than gifted, tends to be valued and protected more seriously. Most family businesses that survive multiple generations treat the handover as a genuine business transaction, not an inheritance.
Encourage successors to work elsewhere first
Spending three to five years in another organisation before stepping into a senior family-business role exposes a future leader to different thinking and cultures they would never encounter inside the family firm alone.
Only appoint family members to roles they’ve earned
Family members should qualify for a vacant role like anyone else, not have one created for them. Since staff costs are usually a business’s biggest expense, every appointment needs to make financial sense on its own terms.
Set a boundary between business time and family time
Working with family blurs the line between the two, and conversations about the business can crowd out actual family time unless everyone agrees to switch off, for example no business talk at the dinner table after a set hour.
Frequently asked questions
Is it ever a good idea to simply hand the business to the next generation for free?
Generally not. A formal sale, rather than a gift, tends to be valued and protected far more seriously by the next generation taking over.
Should family members always report directly to the business owner?
Not necessarily. Having family members report to a non-family manager where possible removes a common source of resentment among non-family staff.
What is the most contentious issue in most family businesses?
Succession planning. A lack of transparency about who takes over, and when, is one of the most common sources of conflict.
Structure protects the relationships that built the business
The businesses that make family partnership work are the ones that put real structure, clear roles, transparent succession, outside advice, around the relationships that got them started.
Further reading: Tips for Finding Your Ideal Business Partner | Department of Trade, Industry and Competition for official small business support information
Originally published in May 2019. Updated September 2026 to tighten this guidance on running a family business. The underlying advice remains sound.
