This master thesis presents the specifics of family business on the example of the Heritage Hotel „Tisno, the aim of this thesis is to show the positive and negative side of the family business and at the end to conclude how the family environment at workplace affects the effectiveness of the business. The family business is characterized by the management of one or more family members, with numerous advantages and disadvantages as well as many challenges they face in an entrepreneurial environment. The distinction between traditional business in relation to family business is that family business is focused on preserving a sustainable business, not so much to a direct profit that is important but not as much. Family entrepreneurship or business in Croatia is becoming increasingly important in all matters, and the fact is that such business model is extremely widespread not only in Croatia but also in the world. Heritage Hotel Tisno is a small family hotel dedicated to the best service for their guests and is located on the island of Murter. Heritage Hotel Tisno is the first hotel in Šibenik-Knin County, the hotel's building dates from 1898 and is recognized as a cultural heritage by the Conservation Department in City of Šibenik.