Family Run Business – an Asset or Liability

by Elias Moses

It is often said, “When there is no vision, the people perish.” but today the speed at which business is evolving, I begin to realise “when there is no passion, its leaders perish”

Family businesses constitute most businesses in India, as anywhere else. While like any other corporate business, family businesses also concentrate on the existing opportunities and entrepreneurial  resources that the market provides. 

Is Family business an asset or a liability

One key resource of the business is their family, and their prime concern is wealth and welfare of their family.

While on the one hand, the family is an asset of joy, with the passing on of time, the same larger family running into its second or third generation becomes a big liability of concern for many reasons.   

A major dilemma many of them have faced particularly in the last two decades, since economic liberalisation began, is to choose between combinations of risks and returns of business growth, and conservation of wealth of the family.

This, of course, is intertwined with the vision/mission of their businesses and families.

Mutual dependence of two ecosystems

Family businesses are fascinating because of the mutual dependence of two ecosystems (family and business) that have inherently conflicting characteristics.

Their co-existence very much depends on how they evolve with the changes and time. 

Some of the key dimensions that determine the cohesiveness of both the family and business are succession planning, remuneration and rewards planning, retirement planning, induction and grooming, ownership structure, preserving wealth, resolving conflicts, business vision, family vision, strategy and governance.

Research evidence suggests that these come under strain especially when their operating environment comes under pressure.

Corporate Governance and Family Business

Growing interest in corporate governance has its positive effects on family governance too especially in introducing greater level of professionalisation in business.

Adapting to the corporate governance model to make a difference in business while retaining their familial values is a greater possibility, provided there is a coordinated effort made by every one involved from the family.

I have personally worked with few family business companies that have been  companies with  strong business ethos for more than a century with a family governance business model. How relevant that model today is, a question that can only be answered only by the family.

In order to maintain the mutual dependance of the ecosystem, the questions the family needs to ask today are the following – 

1. What are the prime areas of importance that might play a vital role in re-shaping its business equilibrium?
2. How to avoid falling into family traps in the future?
3. How to build a corporate governance model?
4. How to balance ‘governance and family’ in this highly technologically driven digitalised business world?
5. What are the prime areas of importance that might play an important role in unifying its bonds and family values and its personnel in this world of changed business model scenario?

A Three Tier Model

This is where, we at Managing Next, offer family run businesses a  three tier business model that create a mutual dependance of two eco-system via a Corporate Governance Model 

Step 1: We identify the family traps by studying market situations, their challenges and the traps that other family run businesses have fallen into

Step 2: we plan and prioritise by creating a business model that transitions simple/complex family structure to a transformational organisational structure

Step 3:  we form a family commission/committee with the implementation plan and periodic review plan

There is no doubt that Indian family businesses continue to be bullish about their growth plans despite the recent economic slowdown. One in three aim to grow quickly and aggressively over the next five years, provided they are able to PLAN & PRIORITISE AND IMPLEMENT AS ONE SINGLE UNIT.

In today’s competitive environment, if family run businesses aim  to be relevant, they need to be highly agile and innovative. They need to work out inner differences as early as possible, work as one allied unit with  a single minded focus and devotion on its vision and mission, and live it with passion for its future generation to emulate its ethos.

We, at Managing Next, offer our explored and enriched services to apply this three tier business Model, namely to create a powerful convergence of two eco-systems – family and business, in turn, turning your business into a corporate governance mechanism.

For more information- pls click our menu page on Consulting services-family business

Elias Moses is a Senior Business Strategist, Consultant, Researcher, Corporate and Leadership Trainer, Orator, Columnist and an Entrepreneur. He is also the Founder and Managing Director of  a growing reality firm in south India. He is also the founder of Managing Next, an Online portal for knowledge share and consulting.

 The author can be contacted@ 

email: elias@managingnext.in,  linkedin:  www.linkedin.com/in/eliasmoses