Family Businesses – Coronavirus, surviving and coming out the other side
Family businesses have been and continue to make business decisions to help protect employees and keep their businesses afloat during the pandemic.
Coronavirus has been around for some time now and, as it, and the rules imposed on us keep evolving and changing, anxiety for families, individuals and especially family businesses, is high.
Many family businesses, like other organisations, took strong immediate steps to protect their employees, customers and communities by limiting non-essential work and making the move to remote working wherever possible. Some had to shut down completely, relying on the government furlough scheme, CBILS, VAT deferral arrangements etc.
These actions were and continue to be essential, but economic worries are also critical for businesses. Many family businesses have shifted their ambitions over the last several weeks/months to survival rather than growth.
You should find it encouraging that historically, family businesses have been more resilient than other organisations when unexpected economic downturns have occurred. Family businesses have typically been in business through multiple downturns and crises, which is the basis for their consistent long-term strategic focus.
There are three key areas where family businesses might consider focussing to help brace themselves for the weeks and months ahead.
- Look after your employees
A main priority for family businesses during these changing and challenging times is supporting employees. Family businesses are inclined to have strong employee retention and loyal staff as a result of goodwill built up over time. This is because they are often potentially more inclined to take better care of their employees and offer stronger benefits than traditional non-family owned businesses. Also, as many family businesses are financially conservative, many are in a good position to take care of their employees, even if it means that the ‘family’ may need to modify or suspend dividends or adjust their salaries.
Clear communication and information sharing with your employees are ways to build trust and ease anxiety to loyal employees.
- Business Liquidity
Financial stability in the face of an uncertain market will continue to be the main challenge facing many family businesses. Fortunately, family businesses in particular tend to be financially conservative and debt averse. This helps to limit their exposure during economic downturns. But, low debt alone does not mean that your family business will be immune from challenges that may result in enforced downsizing or business interruption.
There are several steps which family businesses can take to bolster or maintain their cash flow. Government TTP arrangements, and VAT payment deferrals are just two, and if you have missed the VAT payment deferral scheme, it’s not too late to request a refund.
At the outset, most of us, including family business owners hoped that this disruption would be only a few weeks but they now having to shift their thinking to longer-term scenarios.
Cash distributions to family members may be impacted and even where family businesses have made plans for situations where cash flow would be disrupted, family business owners are advised to consider the worst-case scenario – cash flow forecasting for family members assuming that the cash from the business dries up is strongly advised.
The implications of coronavirus on individuals and business are causing stress and strain across many areas of daily life. Family business owners and their key staff are having to make business decisions to help protect employees and ensure the survival of the businesses. As the economic fallout of this crisis continues to evolve, acknowledging and reacting to challenges as quickly and efficiently as possible can help your family business survive the current climate, and position itself to recover robustly once this pandemic is behind us.
For advice email firstname.lastname@example.org and one of the team will be in touch.
The information was correct at time of publishing but may now be out of date.