Do family businesses score over nonfamily businesses?
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!
The Growth of Family Owned Businesses – The Need of the Hour – EDI
The best way that one can give back to their country is by starting businesses that would add to the country’s growing economy. Although having a family-owned business comes with all the same responsibilities and concerns that public companies have to deal with, the former case is seen as more desirable as you and your family are likely to have greater monopoly over the entire situation.
Family-Owned Businesses in India
Most family-owned businesses have their roots in the joint family system. In India, every family-owned business is always striving to improve their growth and bring about a certain amount of professionalism to the job. However, by keeping with the changes in technology and developing trends, family-owned businesses have witnessed a growth in the past year and are foreseeing a 50% increase in bullish growth.
A majority of families follow a line of succession that is based on age so while two-thirds of family businesses already have plans of succession in place, only 15% of them will actually help improve the business play. This is because apart from not being documented, the rest are not robust at all. The only good part is that a very large majority of family businesses in India, about 75 percent, have a well-established mechanism in place to deal with all kinds of conflict.
The Impact on the Economy
About 90% of Indian businesses are said to be family-owned. It has been found that the contribution of family owned businesses to the domestic economy has been far more than that of the public sector or even of multi-national companies. About 50% of the businesses that are listed on the National Stock Exchange indexes are family-owned.
Hence, the progress of the Indian economy is closely intertwined with that of family-owned businesses. With a little aid and assistance in improving their strategies, family-businesses will soon become major contributors of the country’s Gross Domestic Product.
Challenges Faced by Family-Owned Businesses
Family-owned businesses do face a few challenges when it comes to their growth structure. The most important is the stiff competition that arises when you decide to take your business to an international level. Apart from this, succession plans may also cause a significant amount of damage to your increasing growth structure as the new generation may not have the knack of tackling the various business-related issues.
So unless you start to professionalize your management strategy, diversify your leadership strategies so that your business can witness better growth, you will not be able to reach very far.
How Can EDI Help?
At EDI, we have a well-structured syllabus that deals with all aspects pertaining to entrepreneurship education and development. We provide opportunities for you to engage in collaborative research with well-known personalities that have made a name for themselves in their own spheres.
By brushing you through the various strategies for rural and urban entrepreneurship, you will certainly have an advantage when you choose to start a family-owned business. With an academic fraternity that will train you in the different trends that affect businesses, you will be exposed to the various limitations that you are likely to encounter while embarking on this venture and will also learn how best you can deal with them.
So join EDI and let us open up the world of business to you so that you emerge a success.
Reference URLs:
http://www.pwc.com/gx/en/services/family-business/strategy-growth.html
http://www.pwc.com/gx/en/services/family-business/family-business-survey/territory-insights.html
https://leeiwan.wordpress.com/2006/08/17/20-challenges-faced-by-a-family-owned-business/
http://www.livemint.com/Companies/noJbF1pcZlPDmlRyO4AhqI/Economy-highly-dependent-on-familyrun-businesses-destiny.html
http://www.fmblinks.org/article/family-managed-businesses-in-india-the-opportunities-and-the-challenges
http://quod.lib.umich.edu/m/mfr/4919087.0002.208/–family-businesses-as-economic-phenomenon?rgn=main;view=fulltexthttp://www.ediindia.org/