The changing dynamics do pose many challenges and obstacles, but it also brings with it many opportunities for these Businesses to progress, provided they are ready to change and take that risk. Though, many family businesses or enterprises know that there is a need to upgrade and transform their business, they face some challenges in expanding out of the domestic market, accept digitization, or even hiring the next generation.
A Global View
The top three plans for most of the family businesses included expanding to new markets. Over 70% of the family businesses which took part in the survey said that they were planning to expand in other countries or have already started to set up their offices or presence globally.
Especially in Singapore as their market size is very limited and there is a need for local enterprises to look for new markets, revenue streams and customers so that they could remain competitive. But having said that, going into unknown foreign markets could be quite complex. The main challenges faced by these family businesses surveyed includes unfamiliarity with the rules and regulations in that foreign country (20.8%), finding the correct business partner (18.3%) and hiring the right king of talent (16.1%).
To tackle this challenge, these businesses could either leverage their own networks, or try to collaborate with some professional agencies that have experience in doing so.
Coming to terms with the Digital Wave
We are in an age of digital disruption and every family business today needs to re-look at their business models, systems and processes so that they don’t lose out. Though over 85% of family businesses that took the survey said they were open to participating in the digital economy, about 34.7% did not have any concrete plans in this regard. About 36.2% said that finding various ways to transform their business using latest technology was their top-most challenge. About 28% felt that the financial costs involved in digital transformation worried them and 26% said that competitors with first-mover advantages was their top concern.
But it’s important to understand that innovative strategies and digital transformation lays out many new business opportunities.
Bringing professionalism in family businesses
Professionalism is an important element of transformation and it means running the business in a more professional manner. This means bringing in processes and new strategies to improve the value offerings and how attractive the business looks to customers.
It is imperative to also build that mindset so that the business can prepare to drive performance and also eventually deliver value to all its customers and stakeholders. Hence, family businesses need to find areas where they could plug the gaps in skills and decide if they need to hire some reliable professionals who could run their business in the absence of the core team. This way by hiring talent from outside brings objectivity to the company.
Passing the torch
Though it’s a good idea to involve the current generation, it’s also very important to hire professionals from outside to drive and achieve successful transformation. The next-gen is not only more updated and educated, but also more tech-savvy, possesses a global outlook and a capability to lead in today’s digital era.
The business owners should ensure that the most capable person runs the show, even if it is a professional not belonging to the family. About 55.4% of the family businesses who took the survey said that leadership was the most important aspect which the new generation should take over. About 52% felt that the new gen should take over financial management (52.4%) and 50% felt that next gen should handle the emotional intelligence. The seniors in the family businesses should make sure that their children take their company’s credibility to a higher level by sharpening their skills and then bringing their new outlook and expertise back to their family-run business.
The future of all the family businesses depends on how well they collaborate with the younger generation and how they use their capabilities so that they reap the benefits of today’s digital era expand in the market and protect their legacy.
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