State of Family Business Report Flags Stress Due To Raw Material & Labour Costs Inflation
Updated: Sep 27, 2023 03:07:35pm
New Delhi, Sept 27 (KNN) The Reserve Bank of India (RBI) must plan a strategic policy interventions to maintain the competitive edge of Indian family businesses as they are impacted by persisting inflation and the escalating costs related to raw materials and labour, said a survey report by management institute SP Jain Institute of Management & Research (SPJIMR), reported FE.
The survey report ‘India: State of Family Business 2023’ released earlier this week comprised of 357 family businesses across 17 cities including 137 micro enterprises, 136 small businesses and 66 medium enterprises, indicating that most of the family businesses surveyed continue to remain micro or small in size.
About 55.7 per cent of the family businesses surveyed reported growing competition as the foremost challenge in business followed by 53.2 per cent reporting business challenges due to the rising cost of raw materials and almost 50 per cent reporting increasing cost of labour as a hindrance to business.
Among MSME family businesses also, growing competition was the top challenge for 57.3 per cent micro, 55.4 per cent small and 51.5 per cent medium enterprises.
The high cost of raw materials, the rising cost of labour and shrinking markets were placed almost equally as top business challenges by micro enterprises, with about 55 per cent of family businesses attesting to these challenges.
The survey also noted that despite existing awareness and willingness to embrace digital transformation, the current state of technology integration and preparedness among Indian family businesses, especially small family businesses, remained suboptimal.
Over 37.5 per cent of the family businesses surveyed responded that they have no digital sales while 57 per cent had only up to 20 per cent of digital sales.
Another 38 per cent of the respondents reported the proportion of online sales as ranging between 21-50 per cent of total sales and only a minuscule proportion (4.7 per cent) reported their online sales were above 50 per cent.
“The government will need to come up with a set of policy incentives to encourage technology adoption and the incorporation of digital solutions for operational enhancement, customer outreach, and competitive positioning,” the report said.
Another area of concern, according to the report, from a family perspective was founder dependence accentuated by the reluctance on the part of the senior-generation members to relinquish control.