Five Real Challenges faced by Family Businesses in India
Vinod Pandita 17th February 2019 3447Category: Entrepreneurship.(0)

Following five real challenges are faced by family businesses in India in today’s VUCA environment and yet becoming solutions after business owners understand a need to overcome such impediments.

  1. Managing growth

Demands of the new economy call for family businesses to stretch their potential further to optimize existing markets and tap on new ones whilst exploring the innovation imperative. First and second generation of family owners in India now face a vastly different business landscape to when they first started but they are also taking centre stage in the global economy, at the heart of a region that has tremendous room for development and growth. However, sustainable growth and winning strategies in family businesses not only consider the opportunities and risks in the business sphere but also embeds the unique needs and competitiveness of their families too – including succession and long-term stewardship.

“One thing I’ve learned is that you have to drive change fearlessly, if you’re going to continue to grow. Not doing this is the single biggest barrier to success – you cannot meet the needs of an evolving market if you’re not prepared to evolve yourself.”- Second generation family business leader (Auto Components), New Delhi

  1. Professionalising the business and the family

As Indian family businesses continue to establish greater presence globally and grow to a certain size, they also face more intense competitive pressures, rising costs and the impact of global mega trends. Yet for any family business to take advantage of the opportunity to grow in today’s globalized world, the challenge is to identify ways in which to do that as effectively as they can. That will require families to become more professional in their business and personal approach, which many family businesses in high growth economies are increasingly keen to do. It may be about formalising roles in the business and putting more structure to the way decisions are being made. Either way, families will need to look into establishing greater formality in both the business as well as the family as their business expands.

“We are formalising parts of the business to prepare potential family or non-family members as they take over in the future.”- First generation family business leader (Leather Shoes), Kanpur

  1. Acquiring talent and skills

Attracting and retaining talent continues to weigh on the minds of family owners as they compete for the right skills and a strong talent pool needed to drive their business. The next generation of leaders, be it family or non-family members, adopt a very different outlook and expectations of their careers today. How should the family business operate in a way that enables the next generation workforce to meaningfully demonstrate their strengths and for them to see a clear career path that will provide the opportunities to grow with the business? For non-family members, navigating the dynamics of family can be tough and sometimes poses a barrier for them to maximise their capabilities. As a family business professionalises, steps can be taken to ensure such occurrences are minimised.

“I have to attract the talent we need for the future. I’m very much aware that family businesses aren’t always as aggressive as they need to be in attracting talent from outside. But we wouldn’t be a Rs. 80 Cr company without constantly grooming our next generation of leaders.”- Third generation family business leader (Automotive Forging Industry), Faridabad

  1. Managing succession/Grooming the next generation of business leaders

Only average 34% of top 500 family businesses in India have their successor chosen, with 11% having a robust and documented succession plan. The urgency for a clear handover path as transition takes place is greater than in other parts of the world. As Indian family businesses are generally facing only their first or second transition, the process may be new to them. And for those taking over the family business, expectations and plans of the succession process can pose some worry – how will their parents adapt, how they will measure up and overall being able to manage the process successfully by ensuring their parents still feel involved and able to contribute.

“One of the biggest challenges that I faced was earning the respect of other people. A lot of people might think ‘You’re only here because your dad’s the boss’, and while that might be true in terms of getting the job in the first place, once you’re in the role you have to work three times harder than anybody else because the spotlight is always on you.”- Second generation family business leader (Auto Ancilliary), Gurgaon

  1. Managing conflicts

Conflict can stem from many areas within the business but it is particularly acute in a family business when the business grows, and the number of stakeholders increase but not enough is being done to address everyone’s needs and expectations. Between generations, there can be gaps in communication and credibility. The difference in objectives (short-term versus long-term) between owner-managers and professionals also gives rise to conflict. The collision of expectations and the lack of communication can be emotionally-charged but more importantly, harm relationships between key family members which eventually affects the business.

“When you have a business that involves family members, you are going to have conflicts sometimes within the family, but also with other colleagues. But disputes with colleagues are easier to resolve because your relationship is purely professional. But disputes between relations involve many different roles – father and son; mother and son; brothers and sisters; and on top of that you are also colleagues.”- Second generation family business leader (Steel Barron), New Delhi


Author: Vinod K. Pandita

“Vinod is an internationally acclaimed management consultant, certified intelligent leadership coach, business coach, accredited NBI coach, master trainer, quality practitioner, motivational speaker, author and a firebrand entrepreneur. Vinod has over 25 years of experience and expertise in auditing, consulting, training and coaching small and medium businesses, large corporates, individual managers, aspiring entrepreneurs and directionless youth. His footprints of work are in India and Middle East. He understands individual and business challenges to the core and has designed simple yet powerful engagement models and service solutions for success, growth and happiness of his clients and society at large especially in SME space.”

He is in the making of authoring a book with title “Maximize Your Life” where he is expressing and communicating his deep thoughts and life experiences to inspire and coach masses to derive potential of Personal, Professional, Social and Spiritual quadrants of profound life of individuals towards grand success and happiness.”

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