Professor Kavil Ramachandran, Professor of Family Business and Wealth Management at Indian School of Business Management (ISB), has maintained that building structured succession was key challenge for building a successful and lasting family business .
“Family businesses, usually SME’s, make a major contribution to the economy but for various reasons they tend to disintegrate by the time the third generation takes over the management. Hence, it is important that family businesses conduct a structured succession planning exercise to retain their long term profitability and growth.”
Professor Kavil Ramachandran was here to deliver lecture at a Speaker Session on ‘How to Build Lasting Family Businesses’ organized by The Indus Entrepreneurs (TiE), Punjab & Chandigarh and the Indian School of Business (ISB) at Chandigarh.
According to Professor Ramachandran, “Family businesses face a lot of succession challenges and usually the fallout of this is business gets split into various smaller entities. This results in a loss of competitiveness, legal battles and an overall dilution of the brand. Bankers, customers and suppliers tend to lose their respect for the business and a once flourishing entity slowly dies away.”
Talking about how to face such an inevitable challenge in a family business, Prof. Ramachandran said, planning was the key. There was a need for a creating a clear strategy for the business and the family, a strong leadership that can take hard decisions especially where the family is concerned and a professional team that can manage the daily affairs of the family business.
Effective communication within the family is a must and for this the options are to create a Family Council and hold Family Meetings regularly.
