2018-06-14 01:48:15Growing a businessEnglishUnderstand some of the issues involved when you try to help your family-owned business expand and compete in a larger, even global,...https://quickbooks.intuit.com/in/resources/in_qrc/uploads/2018/06/Family-owned-business-professionals-review-business-strategies.jpghttps://quickbooks.intuit.com/in/resources/growing-a-business/family-owned-business/Bringing a Family Business into the Future

Bringing a Family Business into the Future

2 min read

If you’re running a family business in India, you may wonder what you can do to help it expand and thrive. Many Indian family-run businesses last across the generations, but preparing for the future can be complicated in a business that perhaps hasn’t functioned with written policies and procedures. Family businesses do bring some real advantages into the marketplace, though, and resources are available to help you bring your family business into the future.

Advantages that Family Businesses Bring to the Table

One of the main advantages you enjoy as owner of a family-owned business is the trust you can enjoy in your co-workers and partners. Because you are all committed to one another through your family connection, it’s easy to expand that sense of commitment to the business. In addition, family structure provides an existing structure for your business.

In addition, communication problems are often minimized in a family-owned business, since everyone involved in the company understands each other so well. Even when people disagree over what direction to take with the business, they’re able to discuss their issues with a sense of trust, and again, that existing hierarchical family structure comes into play to make decision-making smoother.

Continuing a Family Business Across Generations

In most businesses, the key goal is profit, and the key objective in hiring is competence. All this gets set to one side in a family business, where the stakes are much higher. After all, the very survival and existence — both financial and emotional — is at stake in a family business. The added complications of everyone in the business being related means that success is more difficult to measure. If everyone in the family business is happy, but the profits aren’t what they could be, is the business a success?

One of the key difficulties in any family business is the difficulty of firing someone who isn’t pulling their weight without causing a potential schism in the family. Because everyone in the business (or at least at the executive level) is born into it, you may not feel free to hire someone from the outside when you have an opening.

Those issues turn on their head as the business passes on from one generation to the next. The generation that founds a family business is deeply invested in its success and devoted to helping the business thrive. Usually those values are passed on to their children, the second generation in the business. However, sometimes by the third generation, those values can be lost. The third generation sometimes accepts the benefits that accrue to them from the family business, without really understanding what it took to get where they are. At that point the business may actually fall apart.

Seeking Guidance for Your Family-Owned Business

As more international companies establish a foothold in India, many family-owned businesses find themselves facing the need for professional guidance as they try to expand and compete on a larger playing field. Several Indian business schools have established MBA programmes designed for those involved with family businesses. In particular, the Welingkar Institute of Management offers an 18-month course that trains family-based entrepreneurs and business owners in financial and human resource management. As family-run companies establish a more professional outlook and focus more on their financial outlook, including their profit ratios, they can also benefit from taking advantage of business software like QuickBooks to streamline their financial processes.

Family-owned companies have a long and successful history in India. With careful planning, they can thrive across the generations.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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