Family businesses are being scolded towards an extremely different business landscape. The tactics that already have operated very well in the past may not be adequate to preserve their business in future. Family businesses mainly made of two things – entrepreneurial roots and long-term orientation. But, in 21st century a fast-growing essential business circumstance is challenging them to survive in this environment.
The present family firms have to face various challenges in a fast-changing business environment such as, globalization, technological disruption, shortage of talent, and huge competition. Basically, digitalization plays a role of catalyst for change. Along with this, the legacy of family businesses has to face the transition of generation from one to the next. The changing environment fetch challenges but also provide the chances to tidy up the tactics. Generally, this digitalization can assist family business to make things better, smarter, and faster towards transformational change.
Now, have a look at some significant ways of how a family business can tackle the challenges in the present business landscape and transform in 21st century business:
- Creating network and going world-wide: Almost all family business took place from a humble commencement. As the business enlarges, linear growth cannot preserve the invasion of competition. To survive in the competition, family businesses need to find out the new marketplace, consumers, and drift of revenue.
The local market will become competitive as many other businesses with relevant ideas appear in the market. To endure in this situation, the family firms need planning to venture abroad or employed on the internationalization journey to acquire the scalable growth.
Family businesses which based on a particular area may face the complexity on making a base in foreign markets. Becoming familiar with local laws and rules-regulations can pose as a prime stumbling block, as with getting the right talent to enhance the family business in the global market. It can be scary to get into the overseas market alone. But, collaborating with the perfect network can achieve success on a global platform.
- Accepting business transformation: To assure long-term survival, family businesses require to enable business transformation. Whoever can accept the increasing business environment and adapt quickly will be capable to stand in an ocean of competition.
Actually, technological disruption has become an exigent part to revamp the process of all organizations, big and small, conducting business. Here comes a question regarding the strategy of family business. Is any strategy of family business ready to fit in the digital age? Several families run their firms are only just engaging on their transformational journey. To enable and support crucial changes in family business require to have a stable transformation strategy.
Here are three effective success factors for family businesses are:
- Renovation and digitalization
- Tapping the next generation
- Professionalizing the business
- Dealing with technological disruption: The two major parts of technological disruption are digitalization and innovation. Digital disruption is wide, fast, and shaking up how companies are managing their strategies, improving their product lines and promoting product and services. This new fact is forcing family businesses to take a step about their philosophies, business models, strategies and systems and time to question their succession thinking.
In the era of digital disruption, innovation plays the key role in long-term success. Family business require to maintain the pace with digitalization. This can help family businesses make more powerful their competencies, optimize internal systems, turn into more consumer-centric, keeping in mind the market trends to develop decision making, and inflict viable competitive benefit.
- Making more professional the business and family: The way of transformation for family businesses comprise another dimension. As the personal nature of relationships in the family affix another level of complexity. Conflict can wake when focus of family and business are not aligned.
It creates a complex situation for family businesses to transform themselves if they lack regime. So professionalizing the business can generate value as well as assure the long way of business.
An essential objective in professionalizing the family business comprises tapping external talent to guide or lead the business. When family keep the ownership of the business, external talent with the perfect expertise can fetch non-family goal to the business. These outside professionals may in a better place to begin change or preside over tactical planning as the company becomes larger and more complicated.
From an aspect like fit for sale, family business should allot places where they require to plug the skills gap. They also have to make sure that they have sufficient trustworthy front-row people able to run the business during non-existence of family members. The future prosperity of family businesses will depend on how good they can accept the advantages of digital technology to adopt the competitive benefits in the market. The bridge between the old and new, next generations can bring progression in the family business.