Succession planning in family owned businesses: Insights and ideas from the concept of V?naprastha

Abstract

Family Businesses are one of the oldest form of business organisations known to man. In India Family owned businesses (FOBs) account for 90% of industrial output, 79% of organised private sector employment and 27% of overall employment. One of the key problems faced by FOBs is the succession. Our project deals with the fact how the succession planning for FOB is grossly underestimated and how it affects the core nature of business while passing onto the next generation. In the contemporary setting we cannot take the application of Vanaprastha literally for FOBs. Any information regarding the concepts of succession planning in ancient literature like Smritis, Puranas and Dharmasastras will be identified and listed. Similarly the relevance in modern setting will be studied and explored in detail. To gain a deeper understanding about the connection between the two we will look into the FOBs in India which fit into the concepts which we listed earlier thereby giving an idea about what went wrong and how it could have been avoided. Identifying what went wrong in the first place is the best way to address the issue at hand. Looking at the failed successions will provide us the necessary insights about the flawed processes that were adopted. At the same time we will look into few exceptions where the succession planning had a smooth execution. After conducting the necessary analysis we will come up with the framework which will include the steps that must be adhered to, to have a successful succession. This will discuss in details about When should the succession be done? , who should succeed ? and how the succession should take its course ?