Family Business Services

Extended Family businesses constitute the world’s oldest and most dominant form of business  organizations. In many countries, family businesses represent more than 50-80 percent of the overall businesses and play a key role in the economy growth and workforce employment.

Corporate governance consists of the set of processes, customs, policies, laws and institutions affecting the way people direct, administer or control a corporation . Corporate governance also includes the relationships among the many players involved (the stakeholders) and the corporate goals. The principal players include the shareholders, management , and the board of directors . Other stakeholders include employees, suppliers, customers, banks and other lenders, regulators, the environment and the community at large.
It is also a fact that most family businesses have a very short life span beyond their founder’s stage and that some 95 percent of family businesses do not survive the third generation of ownership. The following table shows the declining the family business after second generation.

% Number Factor S.No
43% 75 Lack of Proper Preparation 1
69% 120 Lack of governance and control 2
83% 145 Shares Transfers & Evaluation 3
51% 90 Lack of Board Qualification 4
69% 120 Appointing CEO from Owners 5
45% 78 Lack of Financial Systems 6
29% 50 Dividends Distribution 7
23% 40 Expanding outside current business 8
31% 55 Expanding outside current geography 9
43% 76 Lack of appointing external auditor 10
47% 83 Cultural issues regarding females 11
51% 90 Lack of Leadership skills 12
32% 56 Family crises 13
Source :-Leading point Survey / Medad Survey June 2010

Leading Point Family Business Services Center can improve their odds for survival by setting the right governance structures in place and by starting the educational process of the subsequent generation in this area as soon as possible.

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