Introduction
The family-held and run businesses are the oldest and most prevalent form of business.
In India, keeping business ownership within a family is considered a deeply-rooted practice for ages. India enjoys a rich and glorious history of family-owned businesses.
Today, family business almost contributes around 80 percent of the national GDP annually. According to various estimates, more than 80% of the companies in India are family-owned.
In India, family businesses are still very prominent in today’s competitive time. Some of the advantages of Family Business:
- Stability
- Leadership
- Decreased cost
Stability:
Stability is a very prominent factor for any business. A family business thrives on growth generation by generation, but stability and sustainability are the factors that attract their attention the most.
Leadership
Leadership is the core of any business, and it becomes important when the business is in the transitional phase.
Succession Planning helps create the smooth transition and transfer of powers and responsibilities from one generation to another. A family business aims at having the same type of leadership even if there is a change in the leader.
Decreased cost
Every organization wants to reduce the cost as much as possible to provide the product at reasonable rates.
In a family business, members of the business manage every department. It reduces the as they don’t need to hire a specialist to manage that particular department.
Some of the strategies in family-owned businesses are.
Succession Planning
Succession Planning plays a significant role in the future of any business. Every organization, whether corporate or family-owned, have their future lineup of leaders intact to combat the consequences of transition in the future. Unclear succession planning can lead to differences in opinion in the organization. It defines the roles and duties of every member.
Planning for contingency:
Contingency is a liability that may or may not occur. Mostly it depends upon the future results. Planning for contingency is necessary for different businesses. It is not at all required to have a contingency plan for the elements having not much relevance to the business.
For example, One box of chocolate may not have a great significance for the chocolate manufacturing company, but the retailer selling that chocolate has.
If anything happens with the chocolate as it got lost in transit, manufacturing companies need not show that in accounts, but the retailer should create the entry in his books of accounts.
Treatment of loyal customers
Customer satisfaction is one of the primary goals for an organization.
Organizations hold inventory to fulfill the need of the customer.
If the production is stopped for a shorter period, companies can satisfy the customer’s needs.
After Sales Services From the organization makes the customer feel special.
Organizations Also take care of the product if maintenance is needed to help the customer.
Valuation of Business
Valuation of business states the current standing of the business in the market. It helps in setting up future goals acting as the standard. Constant follow-up is required to analyze the situation and act accordingly.
There are some of the problems which may arise in the family business.
The conflict between the interest of family members and business
When there is more than one mind dedicated to a single object, the conflict is bound to happen. Each organization tries to avoid the conflict of interest between the members as it diverts them from the common goal towards the organization.
Lack of succession planning
As discussed earlier, succession planning is important for the organization. The lack of succession planning impacts the future-proofing of the family business. It affects the clarity of work among the members as they need someone to direct them for further operations.
Conflict within the family members
Conflict among the members is not only bad for the organization, but it also creates unnecessary tension in the personal lives of the members. Members need to resolve their differences as soon as possible for the betterment of the business.
Some of the solutions for the problems are:
Working on a specific objective
Specific objectives are goal-oriented objectives.
Family business makes these objectives fulfill a specified goal/ need.
These objectives are pretty straightforward as it explains what members need to learn from the current generation and how to implement it in their work tenure.
The purpose of these kinds of objectives is to provide clarity and direction. It defines the role of each individual in such a way that there is no possibility of misinformation.
It is best suited for the optimum allocation of resources. The goal is so specific that it is easy to identify the problem and its solution.
3) Perfect delegation of work.
Training and Development
Training and development are one of the initial steps in the process of development of the members.
It prepares the new members for the business responsibilities and helps the current members to cope with the pace of changing world.
It is helpful for the family business if they are open to the changes as it brings more uniqueness to the whole process.
