Family businesses: Secrets of success and succession

Is a family-managed business easy to run? What about succession planning, and how will you sustain it?

In family business—whether it's one you've inherited from your parents or one you wish to pass on to your children, succession is incredibly important, experts say.

Successful businessmen shared their insights at an MSME summit in Kozhikode recently. 

Evolve Back Resorts

Evolve Back Resorts, owned and operated by Orange County Resorts & Hotels Limited, is promoted by Ramapuram Holdings, with a history in the industry spanning over a century. 

‘Evolve Back’ manages experiential resorts in Coorg, Kabini, and Hampi in Karnataka, as well as in the Central Kalahari, Botswana.

Jose T Ramapuram of Evolve back Resorts emphasises the importance of targeting a specific audience rather than competing solely on price.

“If we are a luxury property, we need to identify and target our specific audience. We have 58 villas in Coorg, all with private heated pools, a unique feature in India. To stay ahead, we had to play a different game,” he said.

Jayalakshmi Silks  

Another top businessman, Sujith Kamath, Executive Director of  Jayalakshmi Silks explains how it has maintained its success as a wedding destination for over 75 years. 

“We believe in providing quality products and excellent customer service, principles passed down from my grandfather” Sujith Kamath said. 

Started in 1947 in Cochin, Jayalakshmi Silks has grown from a small 200 sq.ft. store to a leading fashion brand in Kerala and Karnataka. 

“We try to be a trend setter by understanding the minds of our customers. Therefore, we can easily find products that suit their needs in our showrooms,” Sujith Kamath said.

Jayalakshmi has four showrooms in Kerala and one in Mangalore. There are plans to open seven to eight stores in Karnataka, Tamil Nadu, and Andhra Pradesh within three years.

Professionals in family businesses

Praveen Sivaramakrishnan, Co-founder & CEO, Innosolv Professional Solutions Pvt. Ltd and Director, UK & Co, a family business management consultancy, highlighted the role of professionals in family businesses.

“Families need to decide whether they want professionals, or friction arises," he explained. 

Professionals should be shielded from family conflicts to maintain smooth operations, Sivaramakrishnan said.

“There needs to be a separate family council to discuss internal issues, while professionals should be allowed to focus on their work,” he advised.

Elanad Milk  

Elanad Milk is the remarkable story of a newspaper boy who was also a milk vendor and went on to become an entrepreneur, but ended up running a loss of Rs 26 lakh.

But in just two years, Sajeesh Kumar bounced back with a whopping turnover of Rs 85 crore. 

“We process 1.5 lakh litres of milk daily, with 95 percent procured directly from farmers and 95 percent reaching consumers through our own network. This direct connection from farmers to consumers is our USP,” Sajeesh Kumar said.

During the pandemic, the business expanded into all districts of Kerala. His advice? Hire top professionals and focus on continuous learning.

Sustainability of family businesses

Ullas Kamath, founder of UK & Co, asked why some family businesses fail to pass on to the next generation. 

He quoted a doyen of Indian industry: “Families should borrow businesses from the next generation, not from the elders.”

“According to a study by Ernst & Young [accounting firm] family businesses fail in India because of emotional entanglements, leading to friction in the boardroom,” Ullas Kamath said.

For Evolve Back, “family comes first”.  

“When the family is strong, management follows naturally,”said Ramapuram, adding, “in our family, if someone goes quiet, we make an effort to reach out and keep the connection alive.”

Giving the examples of some of India’s biggest business houses, Ullas Kamath pointed out that they all “quickly moved towards professionalisation.” 

“Once the business is divided, they lose the synergy they once had,” he explained.

Succession plans  

Succession planning is a critical issue in India where the success rate of taking a business into the 4th generation is less than 0.5%. 

“But those like Godrej [Group] are maintaining the business with pride, happiness, and commitment,” said Ullas Kamath.

Ramapuram pitches for expansion, if other family members are interested.

“Our venture has four verticals: plantation, hospitality, real estate, and FMCG. If the family members are interested in another business, we will consider that too,” Ramapuram said.

Jayalakshmi Silks has a well-defined plan to ensure smooth transition of business to the next generation.

“We train the next generation to take up leadership roles,” said Sujith Kamath.

"All generations must think of the business as belonging to the next generation and hand it over in the best possible way," Ullas Kamath concluded.