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LEAP Forward for Family Managed Businesses

  • By faber
  • May 3, 2016

Farms are the earliest form of family managed business. Today family managed businesses (FMB) are considered as significant and important part of the world economy. Every business organization has a unique set of challenges associated with them. The FMB is no different.

A well known saying about FMB states – “Father, founder of the company, son rich, and grandson poor”. Research also suggests that 13% of family business in India survives to 3rd generation and only 4% survive to 4th generation. These numbers are startling! In some FMB, control of daily operations is a problem. In others, a high turnover rate among non-family members is a problem. In still other companies, growth is a problem because some family members are unwilling to put profits back into the business. Reasons are plenty; let us look at few of the challenges prevalent in the industry:

– Absence of clear policies and business standards
– Lack of outsider view on operations in the business
– Absence of strategic planning
– Lack of long term planning
– Lack of well defined organizational structure and hierarchy
– Lack of skilled talent in the family
– Lack of succession planning
– No well defined training modules for new family members that enter business
– Lack of good management practices. There is a lot of influence by certain family members and traditions
– Resistance to ideas and change proposed by young members
– Lack of proper vision/ mission/ goal
All the above-mentioned issues in FMB are nothing but a unique set of management related issues that stem from the overlap of family and business concerns. Strategic planning around both business and family goals is vital to successful family business. Since most of the conflict arises due to disparity in business and family goals, planning is required to align these goals and formulate a strategy to achieve the organizational goal.

In this planning process, the management should analyze the strengths and weaknesses of the organization in relation to its environment, including its organizational structure, culture, and resources. The next stage should involve identifying opportunities for the company to pursue, given its strengths, and threats for the company to manage, given its weaknesses. Finally, the planning process should conclude with the creation of a mission statement, a set of objectives, and a set of strategies and specific action steps to meet the objectives and support the mission. A professional framework and approach can be a tremendous asset while confronting planning issues.

The need to have a robust management platform and a well-defined roadmap to reach desired goals is vital. The business goals also need to be further linked to individual tasks and targets through a performance management system. It should also include highly capable and skilled leadership from within and outside the family. A well laid out organization structure will help make an efficient decision making system thus avoiding confusion in the system.

People Alignment coupled with elements of focus on aspects of Strategy, Operations and Design will drive success for FMB. Resistance to change is another major roadblock that needs to be addressed. The goal should be to establish an organizational transformational framework that supports continuous improvement.  Linking the appropriate execution plan to the strategy and implementing the same, is where the core FMB team should focus as well.

The ultimate goal of the family and business should be to create an improved work environment that is customer centered, flexible, efficient, and affordable.

The rewards of a family-owned business are many as are the challenges. The key to success will be having right people at right place, right implementation strategy and a robust management information system. Those who manage the family business should enjoy the business to the fullest and success will come their way.  The sense of passion for the business should be passed on when the time comes for handing over the lead.

Written by: Faber Jalay Pandya

Faber Jalay Pandya is Director and one of the founding partners of Faber Infinite Consulting (, with operations in Asia Pacific, Africa & Middle East. He holds a masters degree in Marketing Management with his 1st degree being in Engineering. Faber Infinite Consulting with its customized transformation framework has assisted and created tremendous value for Family Managed Businesses in India as well as in African region.