A family business is different from other businesses and corporations in many ways. While any organization or corporation has various kinds of purposes for its incorporation and operations, a family business is founded and operated based on the founder’s vision and goals for the family.
Every family business goes through a set cycle that helps the business to grow and achieve its goals. Even though not all family businesses go through the same steps in their life cycle, many of these stages are common to all family businesses. When one learns about the stages involved in the life cycle of a family business, one can work towards the growth and development of the business in the right way.
The life cycle of a family business starts with the founder. The founder has a set vision/mission for the family business and its growth. The business is initiated by the founder to achieve his/her goals. At this stage, the founder is cautious about the success of the business and thus, he is involved in minimal risk-taking. This allows the founder to build a business with caution and attention which in turn makes the business successful in the first generation.
According to an article published by Forbes India, 70% of the family businesses fail before reaching the second generation. More than 90% of family businesses in India are unable to survive beyond the third generation. The founders need to have proper succession planning to make their business survive beyond generations.
In the next stage, the next generation or the founder’s children are introduced to the business. The next generation is educated in a modern environment and thus they try to bring modern techniques and strategies to the business. The younger generation has an immense belief in pursuing MBA in family business management in a bid to professionalize the business environment in their family business.
The professionalization begins with the next generation implementing formalized structures, strategies and technological advancement to the business operations. Formalization is often equated with a need for a professional education, for instance, a MBA in family business.
This takes the business forward to its growth stage where it becomes more professional and helps the owners in practicing the modern techniques of the business world in its operations.
After introducing modern strategies and technologies in the next stage of the family business, the business escalates to reach new heights. During the expansion and growth stage, the members take huge risks to make progression. These risks amount to the progress and growth of the family business. Only 15% of startups are able to reach the growth stage.
How to grow my business? A common question arising in the next stage of a family business. With the world experiencing changes within the blink of an eye, it is necessary to adapt to the constant changes that might require looking on the outside. An imperative question arising is on the necessity of a MBA in family business management to succeed.
In this stage, the family business requires going through certain changes. The changes take place keeping in mind the values and vision of the business founders. The modern approaches are combined with the founding principles of the business and yet adapt to the new and latest business practices. Constant evolution requires you to be updated which is only possible through specialized family business courses.
The family business in this stage comprises many family members as the family expands. This calls for proper strategies and policies known as family business management in order to manage the family members occupying different positions in the business.
After the expansion stage, the business needs to be unified and branded so that it can create a legacy for the coming generations who would take the business beyond generations to come. The family business needs to hire professionals from inside or outside the family who would look after the proper branding of the family business and make it a legacy for generations to come. At this stage, if the business wills, it can look for expanding into international markets.
If a business reaches the last stage of creating a legacy, then it can survive for generations. Not every business goes through the same life cycle as certain family businesses have different visions and missions. This is the life cycle of an average family business and one can learn from these stages of a business life cycle to implement the best practices to their own family business.
Learning well is at the core of good planning. There are a range of options available in courses for family business and family business management to simplify the planning stage for you. Learning does not imply it will be time-consuming. Gone are the days when family business would require you to enroll in a two year MBA in family business management. Efficiency and intensive learning are combined to create multiple family business courses in India to make the process effortless for you!
Studying a family business life cycle can help you understand the integral parts of the life cycle of a family business and how one can prepare themselves to create a legacy for the next generations of the family. Planning is essential for a new business. More than 40% of startups fail as the product/service they deal in has less demand. If a family business owner understands the business life cycle and plans accordingly, failure can be avoided. The life cycle is a blueprint for every family business to flourish and take their business beyond generations to come.
Want to know how is family business MBA is different from other MBA programs? Learn here.