Top traits of India’s leading family-owned businesses
Sep 11, 2024
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Family-owned businesses (FOBs) in India
Family-owned businesses have been prevalent in India since over a century, but in recent years, they have transformed, adapting to the changing tides of the nation's growth. From manufacturing and services to technology and retail, the influence of these family-run enterprises is undeniable.
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Top FOBs in India
India’s business landscape is dotted with powerhouse family-owned enterprises like the Ambanis, Adanis, Birlas, Jindals, and Nadars. But what sets the most successful FOBs apart? According to a McKinsey report, here are the key traits that make them stand out.
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Family-owned businesses drive India's economy
Family-owned businesses (FOBs) contribute over 75% to India’s GDP. Projections from the same report suggest that FOBs could account for 85% of GDP by 2047.
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Higher margins and revenue growth
FOBs consistently outperform other companies when it comes to profitability, boasting operating margins that are 7.8% higher and revenue growth that is 2.3% greater.
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The importance of professional leadership
It’s no longer enough for FOBs to rely solely on family management. The most successful enterprises are those that bring in professional executives to guide operations. This shift towards professionalism results in a 7% higher capital efficiency.
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Generational transitions matter
The transition of leadership from one generation to the next is one of the most challenging aspects for FOBs and can make or break the said businesses. The top-performing FOBs handle generational shifts smoothly (unlike Succession), ensuring continuity and a clear vision for the future.
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Diversified portfolios enable scale
The most successful FOBs diversify across nonadjacent sectors, not only scaling their operations but also reducing risk.
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Building strong talent and culture
Top FOBs excel at identifying, training, and retaining talent, driving long-term success through strengthened organisational culture.
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Governance for long-term success
Robust governance ensures smooth transitions, balancing family roles with business goals.
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