Noted Indian academician Dr Girish Bagale on Saturday said although family businesses are booming in South Asia, they are facing tough challenges globally and locally due to management issues and market change, UNB reports.
“Complexity is more in the third generation of a family business…data shows that after the third generation, a family business often collapses,” he said while speaking at a discussion titled ‘Challenges and Opportunities of Family Business’.
Metropolitan Chamber of Commerce and Industries (MCCI) and Dun & Bradstreet jointly organised the programme at M Anis Ud Doula Conference Hall of Police Plaza Concord in the city.
In his keynote speech, Dr Bagale, an Associate Professor (Operations) at Pravin Dalal School of Entrepreneurship and Family Business Management at Narsee Monjee Institute of Management Studies University based in India, highlighted the key factors behind the rise in family-operated businesses and challenges ahead of them.
MCCI members and trade analysts gathered at the event where Dr Bagale pointed out the separate phases in the life cycle of a family business. “There’re four phases in the life cycle of a family business — establishment, growth, maturity and post maturity. You have to identify which phase your business is currently in and take steps according to that,” he said.
The academician also suggested that new product lines or ventures can be introduced to keep the businesses that are in the post-maturity phase afloat. “You can either add a new product under the family business to renew the cycle or you can try to steady the ship but mind you that is a difficult task,” he said.
The expert who is also Chairperson of Research and Case -development, Weekend-FMBA programme at NMIMS University, said the tensions among family members over the control of business is one of the key reasons behind the fall of family businesses.
“In their first five years of operation, 90 percent of family-owned businesses disappear…only 12 percent survive under current ownership past the third generation,” he said.
According to Dr Bagale, the challenges of family business include leadership change, professionalisation, succession planning, managing family relationships and wealth management.
He said with a careful planning and proper management, family-owned businesses can survive and thrive. “There’re many opportunities ahead for the family businesses globally …e-commerce, export, internationalisation, automation and e-supply claim management are few of them,” said Dr Bagale.
MCCI Vice-president Golam Mainuddin, Regional Manager (South Asia) and Vice-president of Dun & Bradstreet Siddhartha Biswas and former MCCI President Anis Ud Doula also spoke at the programme.