Family businesses, the very backbone of Malta’s economy, navigate a complex landscape where the personal often intertwines with the professional. While contributing significantly to the nation’s commercial fabric, these enterprises are simultaneously grappling with a distinct set of challenges that frequently hinder their growth and longevity.

Perhaps the most prominent hurdle facing Maltese family businesses is the critical issue of succession planning. A staggering number of these entities operate without a formal, documented strategy for transferring leadership and ownership to the next generation. An EMCS study done with the The Malta Chamber’s in May 2024, reveals that only 36% of surveyed businesses possess a written succession plan. This often stems from a reluctance by the current leadership to cede control, or, conversely, a perceived lack of interest from younger family members. This absence of foresight can lead to considerable uncertainty and disruption during critical transition periods, underscoring why many family businesses in Malta, as elsewhere, struggle to maintain their success beyond the third generation.

Beyond succession, a prevalent issue lies in governance and professionalization. Many family businesses in Malta unfortunately lack formal corporate structures; it is common to find that a significant portion operate without a robust Board of Directors, or with a board composed exclusively of family members. The EMCS study doing in collaboration with the Malta Chamber further highlights this, noting that 46% of those with a board comprise only family members, lacking external, independent non-executive directors. This setup inherently risks conflicts of interest, diminishes accountability, and often deprives the business of objective, external perspectives crucial for sound decision-making. The lines between family dynamics and business operations can become increasingly blurred, allowing emotional factors and familial relationships to unduly influence strategic choices, potentially to the detriment of the company’s performance. Furthermore, a tendency to prioritize immediate operational concerns over long-term strategic planning can impede a business’s capacity to adapt and expand; indeed, 86% of owners/managers’ time is reportedly spent on daily activities rather than strategic matters, and only 32% have a regularly reviewed written strategic plan. A significant 64% even admit to basing decisions on intuition rather than data, according to EMCS research.

In the realm of human resources, Maltese family businesses frequently encounter difficulties in attracting and retaining skilled talent, particularly as industries evolve and demand new, specialized expertise. Internal HR challenges are also common, with issues such as a perceived sense of entitlement among certain family members, rigid remuneration structures that prioritize seniority over merit, and the struggle to foster professional relationships unburdened by familial emotional ties.

Financial challenges also loom large for these enterprises. Accessing traditional bank financing can prove difficult due to insufficient collateral or limited credit histories. Moreover, family-owned firms, often possessing fewer diversified resources than larger corporations, tend to be more vulnerable to economic fluctuations and inflationary pressures. The emotional value attached to the business by family members can further complicate matters when attempting to determine an objective market valuation.

The imperative for innovation and digitalization presents another significant challenge. To remain competitive in an increasingly digital and globalized marketplace, many Maltese family businesses must make substantial investments in their technological capabilities. This is particularly crucial given the intense competition from international players entering Malta’s various markets, which necessitates the adoption of new technologies and streamlined operational processes.

Finally, the intricate nature of family dynamics and conflict resolution poses an ongoing test. Personal disputes within the family unit can invariably spill over into the business realm, adversely impacting decision-making and overall performance. Communication gaps are often at the root of such tensions, particularly during periods of management and ownership transition. Historically, certain practices, such as the exclusion of female family members from leadership roles or basing appointments on gender, age, or lineage rather than merit, have also presented hurdles to progress and equitable growth.

Amidst these pervasive challenges, the “Award in Leading a Family Business” course offered by EMCS Academy emerges as a pivotal solution designed to empower Maltese family businesses for sustainable success. This pioneering accredited course directly confronts the core difficulties identified in recent studies, providing practical, actionable knowledge and skills.

For the critical issue of succession planning, the course dedicates specific focus to understanding the various steps and considerations along the succession journey. By providing a structured framework and guidance on preparing for the future, it enables participants to proactively outline clear processes for leadership transition, ensuring stability across generations.

Regarding governance and professionalisation, the EMCS Academy course equips participants with the tools to set up appropriate corporate governance structures. This includes establishing essential checks and balances, coupled with the right policies, which directly combats the prevalent lack of formal boards and the over-reliance on familial, rather than professional, oversight. Furthermore, it instills a strategic mindset, teaching participants to develop and update comprehensive strategies for their family business, shifting the focus from purely operational matters to long-term growth. Crucially, the program emphasises the importance of becoming a data-driven organization, teaching leaders to base decisions on timely reporting and analysis, thereby moving beyond intuition and towards evidence-based management.

This EMCS Academy course establishes how a professional setup naturally leads to clearer roles, responsibilities, and performance metrics, which can mitigate internal HR conflicts and promote a merit-based culture. By fostering a more professional environment, the course helps family businesses become more attractive to external talent, as well as fostering better internal relations among family members involved in the business.

In essence, the “Award in Leading a Family Business” provides a comprehensive roadmap for navigating the unique complexities of family-owned enterprises. By professionalising operations, strengthening governance, and instilling a forward-thinking, data-driven approach, the EMCS Academy empowers current and future leaders to transform these challenges into opportunities, ensuring their family businesses not only survive but thrive for generations to come. It offers a tangible pathway for Malta’s family businesses to embrace modern business practices while preserving their valuable legacy.