Family businesses are usually the first to be hit by economic turbulence. However, they remain the backbone of each country’s economy and typically suffer from a different threat, which can be an opportunity.
Family-owned small and medium-sized enterprises (SMEs) form the backbone of the UK, broader Europe (Greece included), and the US economy. They contribute significant GDP and employment and often outperform non-family firms in profitability, growth, and resilience measures.
Is it all rosy? No. These businesses face unique challenges-from succession planning and intergenerational conflict to informal governance – that threaten their longevity.
Only 30–40% of family businesses successfully transition to a second generation, and under 15% make it to a third. Family business coaching has emerged as a targeted intervention to address these challenges.
Our research delves into how coaching can boost family firm outcomes (profitability, longevity, succession success, conflict resolution), examines common internal/external challenges and coaching solutions, compares coached vs. non – coached family businesses, and outlines coaching methodologies (executives, team, conflict resolution) used in this context.
All findings prioritize reputable sources, including academic studies, industry surveys, and expert case studies.
Impact of Coaching on Key Family Business Outcomes
Well-implemented coaching can measurably improve critical outcomes for family-run SMEs. Research indicates a strong positive link between coaching interventions and business performance.
For example, a study of 630 family companies found “a direct relationship between mentoring and coaching and the performance of family businesses.”
In that analysis, coaching had a more substantial effect on performance than mentoring. A 2023 follow-up study of 560 family firms similarly concluded that “coaching is a powerful tool for improving performance,” with employee development practices yielding significant gains in firm performance indicators.
These improvements manifest in financial metrics (profitability, growth) and organizational health (succession success, reduced conflict).
Various surveys report incredibly high satisfaction and return on investment (ROI) from business coaching among small business owners. For instance, over 90% of coached business owners attribute direct business growth to coaching, 86% recouped their investment (with a median ROI of about 7×), and 96% would pursue coaching again.
Quantitative data highlights specific outcome improvements:
Profitability & Growth
Family firms that engage in coaching tend to achieve higher profitability and growth rates. General studies of executive coaching show that 51% of companies with a strong coaching culture report higher revenues than their industry peers.
Coaching drives better strategic planning and performance management in family enterprises, translating to financial gains. One Harvard study noted that family businesses (many of which leverage outside advice) outperform non-family firms in profitability, growth, and survival.
Coaches often help implement key performance indicators and accountability, leading to productivity boosts and efficiency gains.
Succession Success & Longevity
Succession planning is a notorious weakness – only 16% of European family businesses (and just 25% of those with a CEO over 65) have a robust succession plan. This lack of planning contributes to the well-known statistic that roughly 70% of family businesses do not survive into the second generation.
Coaching interventions directly target this issue. By facilitating early succession planning and leadership development, coaches improve the odds of a successful generational handover.
Companies that invest in structured succession coaching or mentoring report smoother transitions and higher continuity rates. For example, in a recent North American family business survey, the most common succession hurdles were reluctance to discuss sensitive topics (29% of firms) and a “lack of willing or qualified Next Gens” (22%) for leadership.
Coaching helps families confront these sensitive issues and prepare successors, increasing long-term survival.
While exact figures vary, experts observe that family enterprises with proactive coaching and planning are far more likely to reach third generation and beyond (avoiding the fate of the unprepared majority).
Conflict Resolution
Unchecked family conflicts can cripple a business, but coaching provides tools to resolve and even prevent such disputes. Family firms that underwent conflict-resolution coaching or communication training report measurable reductions in conflict incidents and improvements in family relationships.
General coaching data shows ~ 70–73% of entrepreneurs see improved relationships and communication from coaching, which is especially valuable in a family business setting.
Case studies document that coaching interventions (often alongside mediation) help build trust, clarify roles, and establish protocols to handle disagreements constructively, preserving the business and the family bonds. In turn, businesses avoid costly fallouts; considering that family disputes are a major reason only 30% of firms make it to the next generation, the impact of conflict coaching on longevity is substantial, albeit harder to quantify directly.
Quantitative evidence underscores that coaching yields tangible benefits for family-run SMEs: higher profitability, faster growth, successful successions, and fewer destructive conflicts.
Companies commonly realize a strong return on their coaching investment. In one global survey, 86% of companies at least broke even on coaching costs, and 28% saw an ROI of 10 to 49 times the investment.
Such data makes a compelling case that coaching isn’t just a soft “feel-good” intervention but a strategic lever that drives measurable business outcomes for family enterprises.
Common Challenges in Family Businesses and Coaching Solutions
Family businesses face internal challenges (stemming from family dynamics and governance) and external challenges (pressures from the business environment).
We thought we would outline some of the most common obstacles-succession, intergenerational conflict, decision-making, communication, and external market factors-and discuss how different coaching approaches help address each.
Succession Planning & Next-Generation Readiness
Planning leadership succession is often cited as the number one challenge for family firms. Many founders delay or avoid this topic – nearly one-third of family business owners never intend to retire, and as noted, a minority have formal succession plans.
This avoidance can leave the next generation unprepared and the business’s future in limbo. Indeed, “the absence of a clear plan often results in conflicts over leadership roles” when a transition inevitably occurs.
Coaching helps by initiating and guiding the succession process. Executive coaches work with current leaders to envision a legacy and gradually relinquish control while developing successors’ leadership skills.
Coaches provide a structured, neutral framework to discuss roles, timelines, and expectations, breaking the taboo around succession discussions. This reduces the discomfort in addressing sensitive topics and ensures successors are competent and confident when taking the reins.
By proactively managing succession, family businesses can avoid crisis handovers and ensure continuity.
Intergenerational Conflict & Rivalry
Overlapping family and business roles creates fertile ground for personal conflicts.
Common issues include sibling rivalry for control, parent-child disagreements over strategy, or tensions between active vs. passive (non-employed) family owners. If unresolved, such conflicts can spill into operations and jeopardize the company’s survival.
Conflict between family members is frequently “a big reason” many firms fail to survive generational transitions. Coaching interventions (often in family team coaching or facilitated dialogues) are tailored to defuse these tensions.
A skilled coach can act as a neutral mediator, giving each family member a voice and fostering empathy.
Techniques like conflict-resolution coaching and communication skills training help relatives separate business disagreements from personal relationships. As a result, families develop healthier ways to debate issues without damaging relationships.
Studies of family firm conflict note that establishing trust and open, structured communication is the key variable in resolving conflict and preventing business harm.
Coaches help build that trust by teaching families to focus on shared goals (the company’s success) and introducing conflict management protocols (for example, regular family meetings or councils).
The outcome is a more harmonious working environment and a business that isn’t derailed by internal feuds.
Decision-Making and Governance
Many family SMEs operate with informal or centralized decision-making structures.
A founder may make all significant decisions alone, or decisions may be driven by family hierarchy rather than merit. Over time, this can hinder the business opportunities, which might be missed due to slow or biased decisions, and non-family executives can feel sidelined.
Family firms often blur the lines between ownership and management, leading to conflicts of interest and resistance to outside advice. Governance challenges also surface in the lack of formal boards, unclear job roles for family members, or no performance appraisals (to avoid family awkwardness).
Coaches assist by professionalizing the decision-making process. Through leadership coaching, incumbent leaders learn to delegate and adopt more structured management practices.
Coaches also often advise setting up governance mechanisms (e.g., a family council or independent board advisors) to introduce accountability.
In one analysis, experts noted that an over-reliance on familial trust could “deter the development of proper governance structures” in family firms.
Coaching counteracts this by showing families that formal structures (clear roles, defined authorities, transparent evaluations) will strengthen, not undermine, their legacy.
Some coaching engagements include facilitated family strategic planning sessions, which get all key members to align on the business’s vision, mission, and policies. By improving governance and decision-making discipline, family businesses become more agile and meritocratic, boosting performance.
Communication Breakdowns
Communication in family enterprises carries emotional baggage that typical corporations don’t face. Long-standing family patterns (e.g., a parent with trouble listening to their child or siblings who avoid confronting each other) can impair business communication.
Families might assume understanding (“We’re family, we just know”) and not communicate as formally as needed.
The result is misunderstandings, mixed signals to non-family staff, and unresolved grievances. “Family-owned businesses often suffer the effects of poor formal communication, which can lead to misunderstandings and conflicts.”
Transparent communication is crucial for effective collaboration and avoiding festering hurt feelings. Coaching addresses this through communication skills coaching and team workshops.
Coaches train family members to listen actively, give constructive feedback, and separate personal sentiments from professional messaging.
For example, conflict coaches might introduce communication protocols (such as agreed-upon meeting rules or a policy to discuss business issues in defined forums rather than at home).
In practice, families that engage in such coaching report significant improvements – one survey found that 72% of entrepreneurs saw better communication after coaching. Better communication not only quells existing conflicts but also helps the business run more efficiently, with all members on the same page.
Family SMEs also navigate external challenges, and coaching can indirectly help here as well:
Market and Economic Pressures
Family firms face economic downturns, market shifts, and competition like any business.
Their decision-making might be slower to adapt if family consensus is required, or they might be more risk-averse to protect the family legacy. Coaches (especially business or executive coaches) assist leadership teams in strategic planning to respond to market changes.
By encouraging a growth mindset and innovation, coaching helps traditionally run family firms modernize.
Evidence shows that family firms can be more resilient during downturns by focusing on long-term strategies. Coaches reinforce this long-term outlook while ensuring the company isn’t complacent.
In coaching sessions, leaders work on scenario planning and bold decision-making, mitigating the insular tendency of some family businesses.
Access to Capital and Growth
Many family businesses prefer to finance growth internally to maintain control, which can limit expansion. Others may be wary of bringing in outside investors or executives.
External business coaches or mentors can provide an objective perspective on these issues, highlighting the value of prudent external partnerships or professional management.
By building the current family CEO’s confidence and skill (through executive coaching), a coach makes it easier for them to collaborate with outside talent or investors without feeling their family control is threatened. This can improve the firm’s ability to seize growth opportunities and navigate external partnerships.
Policy and Regulation
Especially in Europe, family enterprises contend with complex issues like inheritance tax laws, succession regulations, and government policies not always attuned to family business needs.
These external factors require advanced planning. Coaches often encourage business owners to engage with advisors (legal, financial) proactively.
While coaching doesn’t change laws, it prepares owners to deal with them – e.g., a succession coach will prompt a founder to start estate planning early to minimize tax burdens on the next generation.
In essence, coaches ensure that the family is not caught off guard by external requirements, integrating those considerations into the business’s strategic plans.
Coaching approaches are mapped to each challenge: executive and developmental coaching for leadership, team coaching for family group dynamics, and specialized coaching for conflict and communication.
By tackling internal dysfunctions and fostering adaptability to external pressures, coaching strengthens the overall resilience of family SMEs.
Coached vs. Non-Coached Family Businesses: A Comparison
What differences can we expect between family businesses that embrace coaching and those that do not?
Research and surveys consistently suggest that “companies with coaching see superior outcomes,” whereas those who go it alone may struggle with avoidable pitfalls. The table below summarizes key differences in measurable outcomes for coached vs. non-coached family firms.
| Outcome Area | Family Businesses with Coaching | Family Businesses without Coaching |
|---|---|---|
| Succession Planning | Develop succession plans actively; identify heirs and groom them over time. Coaching provides a structure for timely transitions – the result is smoother generational handovers and continuity. | Often lack formal succession plans – only ~16–25% have a plan in place. Transitions are frequently delayed or crisis-driven, contributing to the 70% failure rate by the second generation. |
| Leadership Development | Ongoing executive coaching for next-gen and current leaders builds strong management skills and confidence. Future leaders are better prepared, with improved decision-making and interpersonal skills. | Leadership development is informal or ad-hoc. Next-gen family members may ascend by lineage rather than merit, often underprepared. This can lead to performance gaps and credibility issues with employees and stakeholders. |
| Business Performance | Tends to achieve higher growth and profitability. Coaching aligns personal and business goals with strategy and accountability. Many coached owners report a direct positive impact on business growth (92% in one survey). Performance metrics improve as weaknesses are addressed and professional management practices are adopted. | Performance may stagnate or trail potential. Issues like outdated practices, unresolved inefficiencies, or untapped opportunities persist without external feedback. Family firms that do not seek outside guidance can become complacent or insular, hurting innovation and agility. |
| ROI and Investment | Investment in coaching yields high returns. 86% of organizations recoup coaching costs, and the median ROI is ~7×. Intangible returns include improved leadership, employee engagement, and family harmony, all of which translate into long-term financial gain. | There is no coaching expense, but there is also no catalyst for accelerated improvement. Money saved in the short run can be offset by hidden costs of family mismanagement (missed growth, costly mistakes, failed succession). Firms without coaching forego the substantial ROI many peers enjoy from leadership development programs. |
| Conflict Management | Implements conflict resolution mechanisms (often guided by a coach or facilitated in coaching sessions). Families address tensions early, with improved communication and trust. Conflict is kept at a healthy, constructive level and rarely threatens the business’s existence. | Lacks structured conflict resolution. Disputes are more likely to become personal feuds. Family relationships can deteriorate and spill into the business. Many non-coached firms only seek help once conflicts have caused significant damage (e.g., key employees leaving, lawsuits, or breakdown of family relationships). |
| Longevity & Succession Success | There is a far greater likelihood of multi-generational survival. With coaching support in governance and planning, these firms navigate generational transitions successfully. They are equipped to join the minority that thrives in the third generation. | High risk of continuity failure. Statistics show the odds are against unprepared family firms – only ~13% make it to a third generation. Those without coaching or planning often must sell or fold when leadership succession or family conflict reaches a breaking point. |
This comparison highlights that coaching is a differentiator in the family business arena.
Coached companies are typically more organized in their succession process, have more effective leaders and teams, enjoy higher ROI and growth, and maintain family unity, all of which contribute to longevity.
In contrast, family SMEs that do not leverage coaching (or similar external input) often remain vulnerable to internal weaknesses and may underperform or fail for avoidable reasons. As one report put it, many family companies are “lost or sold annually due to lack of preparation by business owners” – a fate that proactive coaching can help avert.
It’s important to note that coaching is not a guaranteed panacea: some family firms succeed without it, and coaching benefits also depend on the family’s commitment.
The evidence suggests that most family businesses stand to gain significantly from coaching support, and the risk of not seeking help is high, given the well-documented challenges in this sector.
Coaching Methodologies for Family Businesses
Family business coaching draws on several methodologies, often tailored to the unique blend of family and business issues.
Executive Coaching for Family Business Leaders
Executive coaching is a one-on-one development process aimed at individual leaders (e.g., the CEO, a managing family director, or an heir-apparent).
Executive coaching typically focuses on enhancing leadership effectiveness while navigating family dynamics in family firms. For instance, a next-generation family CEO might work with an executive coach to develop their leadership style, strategic vision, and emotional intelligence in preparation for taking over.
Likewise, a founder or senior leader can use coaching to adjust their management approach, delegate more, or plan their exit strategy.
This form of coaching often blends developmental and performance coaching techniques.
A developmental approach helps the leader improve soft skills – communication, “big picture” thinking, and empathy – crucial for family influence, while performance coaching ties directly to business goals and key performance indicators.
Family business experts note that a successful coaching program for next-gen leaders should “emphasize the family’s values” and context while building the individual’s capabilities.
In practice, the coach might help a client identify how to honor the family legacy and values and bring their vision and innovations to the business.
Another key aspect in family enterprises is leadership transition.
Executive coaches often guide incumbents and successors through succession’s psychological and practical aspects. For example, a coach can help a longstanding owner gradually relinquish control and empower their children, which is infamously tricky for founders.
One journal article describes adapting executive coaching specifically for family business succession, noting that such coaching can facilitate smoother leadership handoffs by addressing the personal challenges of outgoing and incoming leaders.
Team Coaching and Family Group Coaching
In a family business, the CEO is not the only person who matters; the collective functioning of the family leadership team – siblings, spouses, or multi-generational teams working together – is pivotal.
Team coaching (also called group or systemic coaching) addresses the performance and dynamics of this group as a whole. It involves coaching sessions with multiple family members simultaneously, focusing on how they communicate, make decisions, solve problems, and collectively lead the company.
Team coaching can be invaluable for improving alignment and cohesion among family stakeholders.
Coaches often facilitate sessions to help the family create a unified strategic vision and clarify each member’s roles. Coaching is used to “assist sibling and leadership teams in creating effective alignment and decision-making pathways.”
By exercising teamwork and trust, family members learn to leverage each other’s strengths rather than work at cross purposes.
For example, in a sibling partnership running a company, a coach might help delineate who leads which aspect of the business and establish a protocol for joint decision-making (so that disagreements do not devolve into personal rifts).
Team coaching often overlaps with family meeting facilitation and retreat-style workshops.
Coaches may guide a family by creating a family constitution or charter and establishing agreed values, conflict resolution processes, and governance structures.
This improves the family’s “operating system” in business. A well-known benefit is better communication within the team – coaches ensure each person practices active listening and understands others’ perspectives.
As noted earlier, improved communication (one outcome of team coaching) is linked to fewer misunderstandings and stronger collaboration.
In short, team coaching addresses the family as a unit. It moves the family from relying on informal, trust-based interactions to adopting more deliberate, strategy-oriented teamwork – without losing the familial camaraderie that can be a competitive advantage.
This is particularly crucial during growth or transition phases, when the family must present a united front to employees and possibly hire non-family managers.
By investing in team coaching, many family SMEs have transformed contentious, informal management groups into high-functioning leadership teams with shared goals.
Conflict Resolution Coaching and Mediation
Because of the high potential for relational strife, conflict resolution coaching is a specialized service often deployed in family enterprises. It aims to prevent and resolve disputes among family members in the business.
This can be delivered by coaches with expertise in mediation, family therapy, or organizational psychology who understand business and relationship dynamics.
Conflict-focused coaching typically involves:
- Improving communication (as discussed)
- Identifying root causes of conflict
- Teaching conflict management skills
A conflict coach might work one-on-one with two feuding relatives to reframe their perspectives or hold joint mediation sessions to negotiate a solution.
They also help the family establish preventative measures. For example, a coach may assist the family in developing a formal dispute-resolution mechanism.
Some families write into their shareholder agreements that any serious dispute will trigger mediation or arbitration instead of litigation. Coaches can serve as neutral mediators or recommend professional mediation when necessary, keeping conflicts from exploding publicly or legally.
The benefits of conflict resolution coaching are often described in terms of preserving both business and family relationships.
By learning to manage disagreements constructively, families can debate strategy or finances without personal animosity derailing the business.
One executive coach notes that conflict is inevitable but doesn’t have to be destructive; with training, families can “view disagreements as opportunities and provide constructive feedback.” Some specific techniques used include role-playing difficult conversations, establishing communication ground rules, and creating an agreed family code of conduct.
Coaches also encourage trust-building activities, such as making and keeping small commitments to rebuild trust, as highlighted in a family conflict coaching program.
Another facet is helping integrate non-family employees into the dynamic. Tension often arises between family and non-family staff.
Coaches might train family members in inclusive leadership, ensuring non-family managers are heard, and conflicts don’t become “us vs. them.”
By facilitating understanding and professional respect on both sides, the coach reduces the friction that can cause valuable talent to leave family firms.
Conflict resolution coaching provides families with tools to handle one of their greatest threats. When successful, it results in practical agreements and healthier relationships. For example:
- A family might finally agree on buy-out terms for a member who wants to exit (avoiding years of feuding)
- Siblings settle clear boundaries between personal and work issues
Family disputes are cited as a significant risk factor for second-generation business failures, so the role of conflict coaching in safeguarding the company’s legacy cannot be overstated.
What We Learned From The Research?
Family business coaching has proven to be a highly effective catalyst for improving the performance and sustainability of family-run SMEs across the UK, Europe, and the US.
Quantitative data shows that coaching interventions can boost profitability, enhance management practices, and increase the likelihood of successful succession.
Coached family businesses tend to develop robust plans and skills to navigate their unique internal challenges – from smoothing intergenerational transitions to defusing conflicts –. In contrast, non-coached counterparts often struggle in these areas, with many falling victim to avoidable mistakes.
By addressing common pain points like succession planning, communication breakdowns, and governance gaps, coaching helps family enterprises unlock their full potential as a family unit and a business.
Importantly, coaching methodologies are flexible and can be tailored to each family’s situation:
- One-on-one executive coaching for a new CEO
- Τeam coaching for a sibling partnership
- Conflict resolution sessions for a family in turmoil
The approach can meet the specific need. Numerous case studies and surveys attest that the result is a win-win: better business outcomes (growth, longevity, innovation) and better family outcomes (harmony, personal development, clarity of roles).
Given the high stakes – family livelihoods, legacies, and employees’ jobs depend on these firms – investing in coaching and development is increasingly seen not as a luxury but as a strategic necessity.
As one global study summed up, family businesses should view individual development processes as an opportunity to improve performance…and avoid conflicts in such companies.
Effective coaching empowers family-run SMEs to preserve the best aspects of being “family-run” – trust, long-term vision, and shared values – while overcoming the internal fractures and skill gaps that otherwise hold them back.
With the proper support, family businesses can continue to thrive for generations, driving economic growth and family legacies together.
Call us to find out how we can help.
Sources For This Research
- Núñez-Cacho, P. et al. (2013). “The importance of mentoring and coaching for family businesses.” Journal of Management & Organization – Study of 630 family firms linking mentoring/coaching with higher performance ((PDF) The importance of mentoring and coaching for family businesses).
- Utrilla, P.N.-C. et al. (2023). “Advance employee development to increase the performance of the family business.” Employee Relations – Finds employee development (training, mentoring, coaching) directly boosts family firm performance (Advance employee development to increase performance of the family business – No. 45-7, May 2023 – Employee Relations – Emerald – Books and Journals – VLEX 940189101 ).
- Pollack Peacebuilding, “Seven Strategies for Resolving Family-Owned Business Disputes.” (2024) – Highlights distinctive family business conflicts (succession, governance, communication) and notes poor communication commonly causes conflicts (Seven Strategies for Resolving Family-Owned Business Disputes in the Middle East – Secretariat).
- Campden Wealth, North America Family Business Report (2023) – Found 29% of firms struggle to discuss sensitive succession topics and 22% lack willing/qualified successors (June Newsletter Compressed), underscoring need for coaching in these areas.
- European Family Businesses (Association) – “Family Businesses in Europe: Opportunities and Challenges.” (2016) – Reports only 16% of EU family businesses have a formal succession plan (25% when CEO >65) (); warns many firms are lost for lack of preparation.
- Secretariat Intl. (HSBC Global Report 2024 data) – Notes 81% of business owners want to keep business in family, but only 30% globally have a plan to do so (Seven Strategies for Resolving Family-Owned Business Disputes in the Middle East – Secretariat); lack of formal succession planning is when “many family disputes arise”.
- International Coaching Federation (Global Coaching Client Study) ICF Global Coaching Study | Insights on Professional Coaching
