Family businesses are thriving in India's rapidly expanding economy

Rapidly increasing competitiveness in India’s business environment appears to be pushing the family business sector in the country towards more organised business segments. Simultaneously, the segment is currently navigating the same challenges as other sectors across the Indian economy. 

Family businesses have always been an integral part of the Indian economy. Form small general stores to large-scale manufacturing units, records have shown that the segments contributes a substantial chunk to wealth creation across the country. In recent years, the evolving nature of businesses has pushed the boundaries of what comes under the label of ‘Family Business.’

A new report from PwC reveals that the rapidly emerging startup culture has also produced a number of new businesses that fall under this ambit, while some large third generation enterprises remain the stalwarts of the segment. The report elucidates the unique value that family businesses bring to the economy.

Where corporations bring strong business acumen and the capacity to generate profit, family businesses are motivated by more human values, thereby allowing them to value the customer and ensure a personal relationship with their client base. In addition, family businesses are often promising studies in vision. 

According to PwC, family businesses are traditionally more considerate of the long-term prospects of their business, given that they seek to build a strong foundation for their future generations. As a result, most of these businesses are comfortable with making sizeable investments to ensure future gains.

The Big Four accounting and advisory firm’s analysis is based on a survey that it conducts amongst the heads of family businesses across India every two years. The firm interacts with the business leaders to determine certain key factors about their operations, including their values, purpose, ambitions and challenges.

“For us at PwC, it is always an enriching experience to speak with family business leaders and understand their journey,” reads the report. The latest survey has revealed a number of interesting findings about the priorities amongst family businesses in India, as the segment grows in prominence. 

First and foremost, the report finds that family values are absolutely crucial to the success of a family business. Most families set out a crystalised set of values, which are then used as an anchor for business operations. These values extend beyond a focus on generic factors such as honesty and integrity, and incorporate more specific values such as community and customers.

The report found that the formula appears to be working amongst family businesses. PwC reports that more than 75% of family businesses in India have registered growth in the last year, compared to the global average of less than 70%. Nearly 60% of these family businesses registered double-digit growth.

These businesses also appear to have aligned their priorities with the modern business scenario. Innovation is the biggest challenge amongst family businesses in India currently, and a number of firms are working towards actively developing innovative skills.

“The ability to get digital talent on board is also an area of concern. Some of the other business challenges cited include those around the economic environment, regulation, digitalisation, competition and cyber security concerns,” reads the report.