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Family businesses in India have ambitious growth aspirations. However, they need to ask themselves some crucial questions: Are they are ready for growth? Do they have their mind set on innovation and digitisation to gain a competitive edge? How will they fund their growth? How are they embracing digital and other technological changes which will impact the business? Are they exploring professionalisation of operations? Do they have a family charter/constitution in place to manage family conflicts and ensure family dynamics are in sync with business objectives? How will they ensure business continuity and are succession plans being discussed openly within the family, particularly with the next gen?
Find out about this and more below. Also, read our report about the perspectives of family businesses on succession planning and business continuity.
Explore survey themes
- Importance of family values in family businesses
- Philanthropy and the family business
- Business performance – Growth of family businesses
- Business challenges faced by family businesses
- Business continuity – Engaging in succession planning
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.’
About our 9th Family Business Survey
Every two years, PwC carries out a Global Family Business Survey where we speak to/poll family business leaders about different aspects of a family business: family values and business purpose, business ambitions, growth aspirations, challenges, and so on.
This is our 9th global survey and we spoke to 2,953 family leaders across 53 countries. In India, we spoke to/polled 106 family business leaders. Most family businesses inherently display characteristics of entrepreneurship, dynamism, resilience, sustainability, innovation, vision and more.
About PwC’s Entrepreneurial and Private Business practice
PwC’s Entrepreneurial and Private Business practice helps business owners and individuals achieve their personal and business ambitions. We provide a series of tax and advisory services.
Our mission is to help business and family wealth grow by bringing our talent and skills to family businesses. We work on the owner’s agenda and provide all the practical and commercial assistance appropriate for the two aspects of a family business, ownership and growth. We have built our success on developing trusted advisor relationships and delivering solutions and ideas tailored to the needs of our clients.
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