Family businesses in India predominantly consist of micro and small enterprises, significantly contributing to the nation’s business landscape. Notably, 83% of manufacturing businesses were micro or small, compared to 73% in the service sector, said a new report.
The SP Jain Institute of Management & Research’s latest survey ‘India: State of Family Business Report 2023’ also highlighted the prevalence of smaller-scale enterprises among the FBs surveyed.
The report aims to offer insights into the intricacies of family businesses in India, shedding light on their challenges, successes, and evolving strategies.
Key findings of the report;
Generational involvement remains significant, with the first and second generations actively participating in 70% of the businesses surveyed. Family ownership and control are paramount, with 51% of enterprises reporting 100% family shareholding, emphasising the closely held nature of family businesses in India.
Prof. Varun Nagraj, dean, SPJIMR, said, “The study underscores the critical role of family businesses in India’s economic landscape. It provides valuable insights into their contributions and challenges, reaffirming the resilience of these enterprises. At SPJIMR, we are committed to fostering the growth and vitality of family businesses, and this report is a testament to our dedication to this sector.”
The report indicated a rising trend of female involvement in family businesses, especially in managerial roles. While 40% had women as owners, a majority, 54.7%, had female members actively managing the business.
The report also underlined the complexity of succession in family businesses. While many intend to pass the baton to the next generation, uncertainties, including capability, interest, and conflicts, often delay the transition.
Beyond these challenges, the report highlighted the digitalisation journey of family businesses.
While approximately 25% of family businesses prioritise digital and new technologies, the majority are embracing online sales for diverse reasons.
Notably, SMEs exhibit intriguing preferences regarding digitalisation timing and methods, including their choice of e-commerce platforms, marketing strategies, and future online sales initiatives.
Despite evolving challenges, the report highlighted the adaptability and resilience of Indian family businesses, with a majority of FBs reporting stable or increasing sales, market share, employment numbers, profitability, and financial indicators in FY 2022-23.
SPJIMR’s Centre for Family Business & Entrepreneurship report draws on an analysis and surveys involving 357 family businesses from 17 cities across India.