Among the many definitions of a family business, we could single out the simplest one, which is that a family business is a business that is related by blood and at least one person from the family is involved in the management of the business. The term family business in Croatia is not officially defined, which makes it difficult to identify, monitor the development and project the impact of family businesses on the Croatian economy. In public debates, a family business represents a company that is owned by the family, provides jobs and income for family members. This thesis defines what a family business is, how it is founded and how it is managed. The paper also presents the division of family businesses, the life cycle of a business and the characteristics of a family business. Despite the numerous works that have been published on this topic, this work tries to bring something new and innovative in dealing with the topic of family entrepreneurship. At the end, the paper looks at two family businesses Gavrilović from Croatia and Česma from BiH.