Why Family Businesses are at the forefront?
Did you know that founders or their families owned almost 60% of emerging market companies in 2011? Since 2011, this figure has only grown – and by 2025 family businesses will represent 40% of the world’s largest enterprises.
How will this happen? Do family businesses have a secret that will set them up for success?
Well, yes and no.
For the past few decades, these businesses have benefitted immensely from the inter-generational collaboration and support that comes with owning a business with family. However, their present success may not necessarily set them up for sustainable growth.
Why? Well, for starters, traditional family businesses are already struggling to nurture their children into responsible, competent business leaders.
A whopping 80% of first-generation business owners are due to retire soon, with no experience of handing over their business to their successors. This has the potential to be fatal for a lot of these enterprises – research has shown time and again that businesses are most vulnerable during their transitionary periods.
They are susceptible to failure because there is no clarity on how the financial, strategic, and other business-related functions will operate in the interim.
However, that does not necessarily mean family enterprises cannot navigate the process of a transition. If done well, these enterprises can actually thrive from the handover to a Next Generation entrepreneur, who has the skillset and competence to scale the business.
Kin and Kith is on a mission to help first generation owners mould their successors into motivated, responsible shareholders. We train and prep the Next Generation entrepreneur with a variety of both soft and hard skills, to equip them with everything they need to take over their business and continue the legacy they inherit.
Why Family Business are Successful
We have seen that family businesses are successful – by virtue of the fact that we all know at least five to seven people who come from that background. They’re not just successful in certain industries; they’re growing across sectors.
So, what gives them this edge?
According to us, family businesses tend to outperform other businesses for a myriad of reasons, some more common occurrences than others. We have outlined the five sources of competitive advantage that family businesses can leverage over companies
Family businesses usually operate from a more long-term perspective than their counterparts. Decision makers aren’t worried just about this year’s profit margins; they work tirelessly to ensure that any decision they take will be beneficial for the company even decades later. This lens helps them pick alternatives that are conducive to the company’s growth and are instrumental in sustaining the enterprise long after the choice has been made.
Continuity
Family businesses are able to cultivate a sense of community and belonging amongst their employees and stakeholders. Owners are typically more involved in the day-to-day operations of the business, which furthers the sense of unity, and creates a loyal, collaborative workforce that is one with the organisation.
Community
Family businesses usually form close connections with external stakeholders like clients or vendors. These connections form the basis with which the entire ecosystem operates, giving such businesses an edge over their counterparts. Family business owners invest in forming deep meaningful relationships with their suppliers, and this fosters a sense of loyalty that the traditional transactional way of doing business can not compete with.
Connections
Family businesses retain the authority to make decisions, and as a result can move quicker than corporate companies, where the process is more bureaucratic and time-consuming. This allows them to be more flexible and respond to market changes faster.
Command
Family businesses are typically financed personally, and the debt-to-equity ratio is quite low, compared to their counterparts. This not only allows them to retain a larger chunk of their profits, but also protects the business during times of financial crisis.
Conservativeness
Traditional Family Businesss MBA
K&K Family Business Courses
Dynamic curriculum that is updated periodically, in line with market developments and trends
Sets you up to take over your family business
Teaches you how to manage and take decisions across business functions
Learning based on practical concepts, interactions, and implementation in the business
Learning can be customised as per your goals
You will get guidance on personal initiatives, and the faculty will mentor you as you apply what you have learnt in real time
The course is designed based on both industry knowledge and experience
You have lifetime access to the Kin and Kith community, with support from the entire business network as well
Curriculum is updated sporadically, usually through external intervention
Sets you up for a corporate job
Teaches you how to understand business functions (from finance to marketing)
Learning based on theory, assignments, and projects
Learning can not be customised as per your goals
You may or may not get guidance on personal initiatives
The course is designed based on industry knowledge
Post-graduation support is limited to your alumni network
Benefits for the NextGen
Clarity of Vision
You will have a clear path and plan of action to follow, starting from being a new entrant to the role of a leader. You will also be motivated and eager to be a part of your organisation with the added confidence and knowledge.
The Leadership Skillset
You will develop a number of skills and capabilities that are required in a business leader as well stimulate personal growth, both of which will help contribute to the betterment of your family business.
Be a Growth Enabler
Along with leadership skills, an important aspect of any family business is your ability to stimulate growth in those around you. If you enable those around you to grow with you, nothing can stop the growth and success of your business.
Benefits for the Family Business
K&K will help imbibe the strengths of previous generations combined with the energy of the new generation to make the process of transition a smooth one while minimising chances of failure.
Successful Transition
The initiatives by K&K will help align the thought process of the next gen leaders with the existing system of values. This in turn will ensure the preservation of the legacy of the business in a smooth and risk-free manner.
Continuation of Family Legacy
The family business will infuse a new set of motivated and determined leaders with new ideas that will help the business develop a better growth trajectory.