Family businesses are dominant contributors to the economy worldwide. It is estimated that almost two-thirds of all global companies are family businesses. As the business thrives and becomes enough cash positive, every family business desires to grow bigger and enter the league of MNCs. But despite all its strengths, growing a family business can pose some distinct challenges. To make the transition effective, growth must be a shared ethos, among all members, and the focus should be on healthy growth which should be sustainable and profitable. During my discussion with leading educators facilitating entrepreneurship programs in India, they emphasized on some key factors surrounding the business growth.
- Focus on Culture building – Every family business has a culture which emerges from the permanent prints left by the founder and their subsequent generations. Whilst, nurturing the values and beliefs, the culture of the organization has to evolve to reflect and keep pace with the industry changes. Most often, family businesses make choices based on nepotism rather than meritocracy, and this becomes a key challenge in attracting good talent. To grow into an MNC, it’s important to build a culture which is transparent, where the members feel valued and provide a fair opportunity for career advancement. The aim should be to move from family-owned business to a family-led business. This also requires bringing in professionalism with respect to systems, structures and procedures which will prepare the team for future challenges. During the growth stage, a strong team will be the backbone of your business and architects of change.
- Digitization and Innovation – Digitization is happening at a much-accelerated pace than estimated, while most MNCs are racing to embrace it, family businesses are still witnessing the phenomenon passively. Digital solutions offer family businesses increased agility and efficiency, as well as better delivery of products and services. It promotes, informed decision making and improves internal as well as external communication. Similarly, there is also a need for innovation, and contrary to popular belief, family business do have the capacity to innovate quickly due to its less bureaucratic approach. The key role of the leaders here is to get innovation culture at the forefront and empower the team members. The next generation of the business can learn more about these strategies by undergoing a specialized family business management course or entrepreneurship course.
- Diversification – This can be viewed as exploring new products/service, expanding to a new geographical area, developing additional lines of business or even investing in new tech. Diversification not just helps in increasing the revenue but also expands your presence and hedges the business against local economic challenges. But before making any expansion plan, the family needs to ensure their current business operations are seamless, and they have a set plan for post diversification management. Hiring professional functional teams can be a great advantage at this stage.
- Collaboration & Partnership – Franchising or establishing your branches is an organic and effective way of increasing your national as well as international reach. With a structured approach and efficient systems and processes, success can be achieved with minimal risks. This is a stage when digitization and automation of business will add to your advantage. The key behind a successful franchising strategy is close monitoring and standardized practices. Attending some franchisee management workshops from a reputed entrepreneurship college in India could be a valuable experience. Joint Venture is another popular collaboration opportunity in developed countries. It helps you to get access to better resources like tech or teams, establishes your credibility in a foreign land by partnering with a known brand, and shares the potential risks with a lesser financial commitment. To grow your business into MNCs, you need to actively explore more collaboration and partnership opportunities locally as well as globally.
Lets us know in the comments about your experience in handling transition in the family business.