Startup Guide

Be your own �Master�

The family- owned enterprise is one of the most common forms of business around the world. In many countries they generate more than half of the Gross National Product (GNP).

Family owned enterprises have been the norm in India for a long time and it is only in the recent past that we are seeing a spurt in other forms of businesses. India has a host of examples ranging from the giants (such as TATAs, Birlas, Ranbaxy and Godrej) to small enterprises in every Indian town.

Distinguishing features of a Family Owned Enterprise are:

1. Employee support in family enterprises is usually stronger when compared to other forms of businesses.

2. Most family-owned business has a strong community orientation.

3. For the younger generation in such enterprises, there are a host of learning opportunities, while they are making their way into the business.

4. Family enterprises have a strong orientation for customer service through which customer loyalty is generated.

5 . Family firms are resilient because of the high degree of trust, security and sacrifice that exist within the family.

Members of such enterprise draw a very thin line between their personal lives and their business lives. Crucial business decisions can suffer if there are inter personal issues and family problems. Very often transition of the business from one generation to the next causes complications. This could be because of a new way of operating the business, or even fresh concepts or thoughts applied for better performance that are not easily accepted by the previous generation.

The changing business environment has led to doubts about how some of these enterprises will survive. Communication is the key to survival. Members of the family have to discuss issues in the open in a proactive manner before problems arise. Many family enterprises fail because they have not adapted management practices and organisational principles such as human resource management and marketing in their day-to-day operations. In such establishments, there often is a stifling of professionals within the organisation and regimented control over independent thought and action.

As a business model, entrepreneurs who wish to start a medium or small-scale business favour the family enterprise. The family can raise the resources and also share the profits within. This enterprise, if it works, offers security of employment for future generations to come.