Small businesses are a very important element in the development of national economies. Family businesses represent a particular type of business. . Family businesses enjoy status as one of the oldest types of businesses because they were present even in the earliest cultures. However, in order for a business to be identified as family-owned it must include family members that are blood related (close or distant), ownership of the company's capital and finally control that manifests itself as the influence of the family in making significant strategic decisions. Family businesses face a number of challenges throughout their life span. One of the biggest challenges that they face is the challenge of business transfer. Business transfer has two dimensions; the dimension of ownership and dimension of management. Management dimension involves only the transfer of the managing responsibilities to someone else while the founder retains ownership, while the ownership dimension also involves the transfer of ownership to the chosen heir. The challenge of business transfer in family businesses is unquestionable, as research shows that only 30% of businesses succeed in transferring business to the second generation. The result of inadequate and untimely start of business transfer process can ultimately make a company to go out of business. Business transfer can be accomplished by inheriting, selling a business or employing a professional manager. The challenge of business transfer in the Republic of Croatia isn’t properly addressed due to the insufficiently developed ecosystem of business transfer. In the empirical part of the paper, the challenges of business transfer are analyzed and presented on a family business “Mirko” which provides forestry services.