Several medium-scale family businesses in the range of Rs. 5,000 million - Rs. 50,000 million, crossed the MSME stage but find themselves stagnating now and unable to take the next leap to become large business houses.
India is the fastest-growing major economy in the world today. Several government initiatives have opened doors for new business opportunities. On the other hand, climate change, geo-political uncertainties, and the recent pandemic have opened our eyes to unseen business risks. In this situation of huge opportunities and risks, how would these businesses step up and be in the big league?
If you are a family business leader, hungry to free yourself from stagnation, here are some essential pointers:
1. Learn from the market: Don’t hold on to old notions, beliefs and superstitions. Marshall Goldsmith says, “What got you here, won’t get you there”. Establish a culture of innovation. Explore new growth opportunities. Network relentlessly.
2. Professionalize: Drop outdated policies and practices. Imbibe modern business policies and practices. Drive a high-performance culture. Move from a person-based to a role-based organization. Establish top-quality business reviews. Build leadership pipeline. Bring automation and digitalization. Build a solid brand image.
3. Strengthen your balance sheet - Both equity and debt are smart levers for business growth if utilized thoughtfully. Be careful of not getting into a situation where you lose control of your business or get into a debt trap. Diversion of surplus funds for private use will weaken the balance sheet. This behaviour will jeopardize your ability to raise growth capital.
4. Cash is reality - Someone had said ‘Revenue is vanity, profit is sanity, and cash is reality’. Ensure that ‘free cash’ generation in the business remains a high priority. Re-deploy as much surplus cash in the business as possible. This behaviour will attract external capital.
5. Corporate governance: Establish a culture of ethics and statutory & regulatory compliances. Establish structured enterprise risk management. Ensure independence of internal audit. Form a vibrant corporate Board and allow it to function professionally. This will build your reputation.
6. External expertise – You will not be able to achieve all the above on your own. Choose a firm that has dual capabilities of
a. business consultancy with practitioner’s approach and change management skills, and
b. personal coaching to guide your own transformation, to become a new-gen business leader.
This journey will not be a short sprint. Your personal conviction and courage will be needed to drive business transformation and expert handling of change management.
Contact us: https://eumatterconsulting.com/contact-us/