RCBJ-Audible (Listen For Free)
Entrepreneurs Should Take A Page From Multigenerational Businesses When It Comes To Navigating A Crisis
By Judith Bachman
The pandemic challenged nearly every type of business – from large corporations to solo entrepreneurs. COVID forced wholesalers, retailers, makers, service businesses to react to a raft of never-before seen conditions.
Some thrived, others perished but anecdotally we know that family businesses, which are typically built for long-term prosperity, had a good supply of tested tactics in their toolboxes to sustain COVID. That’s not to say that some family businesses, particularly restaurants and hospitality providers, were not impacted but multi-generational enterprises often benefit from the wisdom and experience of those who’ve weathered difficult periods not just over several years but during the several decades.
“Family businesses rely on patient capital – they think in generations rather than in quarterly cycles. I recall a member of a sixth-generation family business saying ‘We have gone through two world wars, numerous recessions, depressions, downturns, and other traumatic events…. and we are still standing here today. I’m confident we will also get through this crisis.’” one expert recently noted in a familybusiness.org article on the subject.
To their credit, family businesses remain financially disciplined, know how to retain talent and keep their staff intact, and are focused on the big picture no matter the economic circumstances.
Knowing how to take a long-term view, even in the worst of times, is evident in a recent report on family businesses during COVID.
According to data from PWC’s Family Business Survey, family businesses have been more resilient through COVID than other types of businesses. Only 21 percent needed to seek outside capital to weather the pandemic in 2020. The survey suggests that family businesses have weathered the pandemic relatively well.
This data matches that regarding family businesses in other economic crises.
The Harvard Business Review noted that “when the economy slumps, family firms far outshine their peers. And when we looked across business cycles from 1997 to 2009, we found that the average long-term financial performance was higher for family businesses than for nonfamily businesses in every country we examined.”
While not all entrepreneurs can be in a family business, in these difficult times, some may want to borrow a page from the way family businesses think and operate. They are guided by the principle that one day their children or grandchildren may want to inherit what they’ve built and maintain the legacy. This thinking tends to dissuade a business owner from taking drastic or reactive measures even though it may feel like the sky is falling. Rather than thinking quarter to quarter, business owners must pace themselves for a longer haul. Many business owners have recently said that they are not worrying specifically, month to month, right now. Instead, they’ve taken the time given to us by the pandemic to look at their businesses holistically and plan for the future.
In family businesses, the business itself is like a family, which makes it a complex organism where survival is inherently baked in. Though many businesses think of themselves as families, they should contemplate incorporating a generational mentality into order to get through the hardest of times.
Judith Bachman is the founder and principal of The Bachman Law Firm PLLC in New City. email@example.com 845-639-3210, thebachmanlawfirm.com