The Main Advantages of a Family Business in a Post Covid World
In a Post Covid World, family businesses, could be best summed up through the following statement: There are unique challenges with a family business, particularly when it comes to making tough decisions in difficult times.
The repercussions of making tough professional decisions in a family business can have a lasting impact on family relationships. “There is always this pressure in a family business to not be the one to screw it up.”
This crisis is forcing family businesses to make trade-offs among objectives that would have previously been unimaginable — all while dealing with the complex dynamics of a family. During crisis times for family businesses, “family members tend to come together and do whatever it takes to promote the family’s health and prosperity.” Opportunities for a family to come together and work towards a common purpose make the family stronger.”
The Advantage Family Business Owners Have
And that’s a distinct advantage that other entrepreneurs don’t have.
“Being a family business can be a real strength, because they can rely on family members to chip in where needed. There is always this pressure in a family business to not be the one to screw it up. If you are the one running the business, you are feeling that pressure in a time when, through no fault of your own, it could go away.
You see examples of businesses with revenues dropping fifty percent or ninety percent. No one builds a plan with revenue going away to such an extent overnight.
How has the pandemic impacted family relations at family businesses?
It’s understandable for those having negative reactions, because this is a stressful moment. If the decisions you are having to make are about laying people off and cutting salaries and cutting dividends, stopping projects — these have a real emotional impact.
But we also saw that this is a moment when members of family businesses come together, a rally around the flag effect, where it’s a sense of let’s put aside our differences and focus on saving the business.
How does having a mission or purpose help?
This does offer that kind of opportunity as a silver lining. We are seeing a lot of families coming together around the need to save the business, to save the employees, rescue as many careers as they can, to continue this legacy as something they really value and to come out the other side as strong as possible.
If you have a sense of purpose and here’s this mountain that we are trying to climb, here’s what we are trying to accomplish together, it helps you deal with all of the daily challenges, issues and stresses that come with working together as a family.
Why is this an opportune time for family business owners to have conversations with other family members in the company that may have been pushed aside in the good times?
A real advantage of a family business is you are naturally thinking ahead.
‘I really want this business to last beyond me for the next generations, for my children and my grandchildren.’ That can be a very motivating effect.
Why are family businesses well-positioned to survive this business shock?
As a general rule, family business owners are making decisions not on ways that rely on results this quarter or maybe next year, but in being able to make investments that might not pay off for a year or two or even longer.
That generational approach and mindset can be really valuable in a time like this.
Unlike public companies, which typically focus on maximizing shareholder value, family owners value objectives that usually go well beyond financial returns — such as family legacy and reputation.
This period is an example of that ability to think over the long-term and realize that this year is going to be tough. We have to tighten our belts, cut our costs, cut our dividends, cut our salaries, but it will pay off in the long term.
( All factual and statistical information presented in this blog has been obtained from an extract of an article from Forbes.com) Follow us on our Facebook page and Family Business Office website at www.familybusiness.org.mt
At the Family Business Office we can offer you assistance in dealing with family business succession planning issues through incentives supporting advisory and mediation services. Contact us today on email@example.com.