84% of Indian family businesses expect steady or aggressive growth: PwC

Three-quarters of Indian family businesses have grown in the past 12 months, and 84 per cent of them are expecting to grow either steadily or quickly and aggressively over the next five years, reveals a study. The study was carried between May and August, 2016.

These are the findings of PwC’s 2016 Family Business Survey — The ‘missing middle’: Bridging the strategy gap in family firms. Every two years, PwC carries out a Global Family Business Survey. This year, it spoke to 2,802 family leaders across 50 countries.

PwC spoke to 102 family business leaders in India and the survey captures both the global and Indian findings. Another recent PwC survey of CEOs in India found that 64 per cent of them were positive about growth.

This positive sentiment can be attributed to two broad factors. "We have seen in the past that family businesses tend to remain relatively resilient and stable in adverse conditions; and secondly, the India growth story has been reinforced," PwC said in the report. 

Source: PwC's The ‘missing middle’: Bridging the strategy gap in family firms

Source: PwC's The ‘missing middle’: Bridging the strategy gap in family firms

 

Family business leaders said they would rely on a combination of their own funds and external finance to grow their core businesses. About half of the business leaders said that they would explore new territories and markets and would also look at inorganic growth.

Further, family businesses are aware of the key challenges they will face over the next 5 years: market conditions, government policy and regulation, innovation, digital disruption, technological changes, attracting and retaining talent, competition and professionalising their companies.

They have also understood the benefits of moving to digital, yet a minority acknowledged the vulnerability of their business to digital and more than half do not discuss digital on the board.

Source: PwC's The ‘missing middle’: Bridging the strategy gap in family firms

The PwC survey noted the role of family businesses in nation building, wealth creation, employment generation and contribution to the exchequer is both significant and commendable.

While some Indian family businesses have followed the same lines of business started by their fathers or grandfathers and grown these significantly, others have diversified considerably by setting up new businesses, exploring new sectors and markets, expanding geographically, and increasing their global footprint. 

KEY TAKEAWAYS:
 

• 75% of Indian family businesses have grown in the last 12 months

• 84% expect to grow either steadily or quickly and aggressively over the next 5 years

• 56% of Indian family businesses feel the need to innovate will be a key challenge in the next 5 years

• Only 15% of family businesses have a robust, documented and communicated succession plan

• 35% plan to pass on management to the next gen; 48% plan to pass on ownership but bring in professional management