Why Family Businesses Fail in India | Business | Sarthak Ahuja

Every family business in India fails because of one of these three reasons...

People think it’s because children are born with luxuries, and they don’t work as hard as the parents... but the real reasons are deeper and often missed.

👉🏼 The first big reason is that one child is preferred over the other...

Once this thought is seeded inside one child’s mind, it is very difficult to explain to them otherwise... It leads to major mistrust between the siblings and they can never work together to take the business forward, thus leading to infighting and bringing the business down.

👉🏼 The second big reason is because the second generation feels they don’t have the power to take decisions - it could be in whom to hire, or what new asset to purchase...

If the next generation has to go to their parent for every second decision, they feel emasculated, and the focus changes on how to take control and break away from the control of the parents than to focus on growing the business.

👉🏼 The third big reason is unclear idea of ownership and value of the business...

With loans in the business, even though the business by itself is valuable... they are confused about what will really come into their hands if and when the loans are ever repaid and how the shares of the parents will be distributed.

In summary, it is either Emotional Distancing with family members... or Lack of Decision Making Power... or Confusion about Ownership.

Till the time the entire family does not sit down to resolve these three problems, the business will continue to go downhill.
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A Chartered Accountant with about 10 years of experience in areas of Tax Advisory, Startup Consulting, Fundraising, Audits, Deal Advisory, Business Modelling and contract CFO services.
Winner of the ISB Young Leader Award 2017 and the Best All Rounder, PGP Class of '17, Sarthak has also been published about in the leading financial newspapers such as The Financial Express as possibly the youngest Indian to have completed the courses of CA, CS and CMA along with a graduate degree in Financial & Investment Analysis from University of Delhi, all by the age of 23 years

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