Family businesses go on for generations together. This gives them an easy advantage over non-family businesses as they have deep industry knowledge of what’s happening currently and the past trends too. That’s not all, they have the commitment and passion towards the success of the business and the industry knowledge helps them to take informed market-focused decisions.
Let’s go through each of these advantages in detail:
- Dedication and passion towards the business goal: In a family business, often non-family members too are treated as a family. This strong relationship built with the employees and other stakeholders result in fruitful daily operations as everyone works towards achieving one goal. While the owners tend to take better care as they have their stakes involved in the company, it makes a huge difference when the employer is appreciative of the employee’s talent.
- Decision making: Not having responsibilities towards any shareholders gives the Indian family businesses greater flexibility in terms of making decisions faster, improving the speed with which they launch new initiatives, change operations, evaluate new business opportunities, etc.
- Industry insights: Family businesses work in one industry for longer durations. This gives them significant experience and expertise. They understand the pulse of the market and their consumers well over non-family businesses. This makes them ready for any challenges.
- Mutual trust: Family businesses thrive on mutual trust and believe in maintaining long-term relationships by providing a conducive, supportive and trusting work environment.
- Reinventing entrepreneurs: The Family Business Survey conducted by PWC suggests that:
- 74% of respondents think that family businesses being more entrepreneurial in nature
- 62% think that family businesses generate more employment in the market
- Nearly 60% of the respondents felt that they reinvent themselves with each generation
Family businesses take pride in their contribution towards providing a greater balance and stability to the economy and are more likely to take greater risks than the non-family businesses. While there are downsides of the family business, it’s their industry knowledge that keeps them going generations ahead!
We know of entrepreneurs today who kicked their 9-5 job as they wanted to be their own boss! They had absolutely zero entrepreneurship background but still made a remarkable benchmark in their field of business. But there are individuals for whom it runs in their family. These individuals have decided to take up entrepreneurship because they have grown up seeing their family run a business of their own.
It shows that it is not impossible for family businesses to keep the entrepreneurial fire burning. While the next generation may not have the same spur in them as the founder of the business. The key is to keep EVOLVING.
Here are few factors that make it possible:
- Knowing the history of family business: When an Entrepreneurial Legacy is passed on, it is important to know for the current gen or the next gen handling the business to know where it started from and what their ancestors did to run the enterprise. A study conducted by King’s college in London where they studied 21 family businesses showed that lack of knowledge has actually proved to be a loss for the business. Whereas, the businesses who had proper understanding of the history, compared the past and present and accordingly innovated and hence they were able to make profit.
- Youngsters get started early: When the young generation is taking over the family business reigns, it is important to involve them early in key decisions. At the same time, it is important to give them a chance to make mistakes and learn from them. It gives them a room to innovate and explore their strengths and weaknesses.
- Making practical education mandatory: While there are individuals who have the entrepreneurial traits in their genes, it is important to get a global perspective of businesses which is only possible through education in a recognized B-school and on-the-job learning in other companies.
- Learning from the younger generation: As we mentioned, the key to a successful business is to evolve. The young generation will have ideas of their own. Allow them to explore and the current generation handling the business will have to learn with them. This helps the organization to keep up with the changing trends. Also, everyday is a new learning!
So, if you have an entrepreneur in the family, tell them the tales of your business and motivate them to take your legacy forward. For the next gen who are looking at taking over their family enterprise, get to the roots first and you will know how to take it forward!