Importance of family values in family businesses
A majority of family-owned businesses in India tell us that underlying family values define the business. However, as businesses grow and evolve, a gap often emerges and synergies between family values and business objectives can get lost
- 89% of Indian family businesses feel that they have a clear sense of the agreed values and purpose as a company.
- While families and their businesses define their values and purpose, in a large number of cases, these are not adequately documented and hence not utilised to the fullest extent.
- 90% of family-owned businesses in India state that values and purpose helped define the vision for the company.
- 84% of Indian entrepreneurs say internal communication to employees is done on an ongoing basis. However, customers are communicated with only in 68% of the cases in India.
Philanthropy and the family business
Philanthropic activities in India often imply giving money to good causes and local communities. Given the significant focus on philanthropy, family businesses in India are formalising ways and means to ensure these are carried out.
- 90% of Indian entrepreneurs say they partake in philanthropic activities.
- 89% of family-owned businesses in India are also engaged in some form of philanthropic activity which is over and above giving money.
- 70% of Indian entrepreneurs have set up a foundation individually or jointly with other families.
Business performance – Growth of family businesses
Family businesses in India continue to exhibit growth. In our 2016 survey, 75% of Indian entrepreneurs who interviewed said that their business had grown over the last 12 months. The trend is largely unchanged.
- 76% of Indian family-owned businesses exhibited growth over 12 months, of which 58% exhibited double digit growth.
- 89% Indian family businesses also expect to grow quickly and aggressively in the next two years.
- 89% of family businesses in India use bank loans and credit lines to fund their business.
- 56% Indian family-owned businesses mentioned that they will be looking at bringing in PE funding for the business.
- As Indian family businesses increase in size, a key facilitator of growth is expansion into new markets/territories.
Business challenges faced by family businesses
Given the bullish economic environment in India and the positive growth sentiments accompanying the recognition of emerging economies globally, the response of Indian family business leaders towards challenges is significantly tempered. Some of the key challenges faced by family businesses in India are:
- Digital technology and innovation are perceived as key challenges by 71% of Indian family business leaders, while the economy, competition and costs come in second at 62%.
- 54% of Indian family-owned businesses say their biggest challenge is the need to innovate to stay ahead.
- This is followed by challenges faced in attracting and retaining the right skills and talent, and concerns around regulations and the economic environment.
Business continuity – Engaging in succession planning
Engaging in succession planning is relevant not only for the family but also for the business.
- 73% of the next gen work in their family-owned business in India, which is higher than the global figure (65%).
- Our survey reveals that 60% of family businesses in India plan to pass on management and/or ownership to the next gen.
- However, only 21% of family businesses in India have a robust, documented and communicated succession plan in place.’