Family businesses play an important role in the Croatian economy, often serving as the foundation of small and medium-sized enterprises in the country. The purpose of this study is to explore the characteristics, advantages, and challenges of family businesses and provide insights into their contributions to society and the economy. The study utilizes a combination of theoretical overview and a case study on OPG Pavić to gain a comprehensive understanding of family entrepreneurship. The literature review encompasses the definition of family entrepreneurship, typical characteristics of family businesses, and theoretical frameworks for analyzing their management and sustainability. It also analyzes the advantages and challenges faced by family businesses, including aspects such as succession, family relationship management, and building a corporate culture. The case study results highlight the importance of family support, tradition, and knowledge transfer as key elements of the Pavić family's success. Family identity and personalized approach to guests are considered crucial competitive advantages of the company. However, the research also reveals challenges faced by family entrepreneurship, including ownership transfer to the next generation and a lack of time for rest. Their story provides valuable lessons and examples for other families considering entering the entrepreneurial path in the rural tourism sector