READY TO HELP FAMILY BUSINESSES MEET PANDEMIC CHALLENGES
19th August 2020
Family businesses continue to face a unique set of challenges as a result of the pandemic. Business leaders have faced many difficult decisions such as furloughing staff and company restructures, and for those families who have been living and working together during this period, it’s likely to have been even more stressful.
With many businesses now returning to some kind of normality, cash flow and forward planning are sure to be top priorities.
Family Business Solutions specialists Billy Andrew and Mark Bradford discuss some of the challenges faced by family businesses in recent months and ways to prepare for the future.
Billy said: “At the beginning of the pandemic, our main focus for family businesses was helping them cope and survive while lockdown restrictions were in place. Crisis and resumption were the two main factors. Our aim was to help families plan for an easy, quick and efficient resumption.”
Mark said: “Now, the biggest piece of advice we are handing out is that cash is king in the current situation, so it’s very important to look to the future in order to understand what lies ahead for your business. A carefully created cash flow projection will help guide your decision-making allow you to look at which costs you need to cut in order to ride the storm. However, the current situation is constantly changing, so we recommend reassessing your projections regularly.”
Adapting to the ‘new normal’
Mark said: “In some cases, businesses have been thriving, but there are others who have had to adapt in order to survive the impact of the pandemic. Many have changed their entire business model, or introduced new products. Some consumer businesses have had to introduce systems for home delivery or started taking bookings for appointments.
“The problem is that even with new measures in place, the business may still not be as profitable as it was pre-Covid. Some companies whose transactions are high are still suffering a loss due to issues with social distancing, reduced capacity and the cost of providing PPE to staff. Business owners need to then make cost cutting decisions such as putting product prices up, reducing office size or letting go of staff.”
Billy said: “Family businesses can easily run into problems when emotions come into play – especially when it comes to having to make difficult decisions such as redundancies. Emotions can cloud people’s judgement, but they can also help too. Emotions get a bad press – sometimes they can be seen as a weakness. However, they can actually be used as an asset, as they can strengthen family businesses and bring people together.
“As a family business, you should channel your emotions into protection, provision and planning. Having a good strategy in place will allow you to make good emotional decisions when it comes to these three aspects.”
Seek impartial advice
Billy adds: “It’s important to try and stay hopeful during this difficult time. Turn to people you can trust for advice. Sometimes you need an outsider’s viewpoint in order to see the bigger picture. Focus on planning, protection and provision, and look after your employees, customers and staff.
“You may not always be able to look after them from an economic standpoint, but you can demonstrate good leadership through clear communication and relations. People always remember the way that you dealt with them in response to a crisis.”
Mark agreed: “Share the burden wisely. Try not to worry any family members who aren’t involved with the business – that way they can remain objective and offer valuable advice. Focus on the strength of what your family business can do. You have a unique team which has more than just a financial involvement in the business - there’s an emotional involvement too. That can be very powerful during this time.”
Be proactive not reactive
Mark said: “You still need to be setting aside time for going out and generating new business. You can’t go cutting your advertising or marketing budget - you’ve got to be very smart about where you cut the cost. During difficult times, a lot of businesses cut training out, when actually that might be the most important thing to bring your new reduced workforce up to the standard that is required.
“It’s important to strike a balancing act between cash flow consideration and running your business as normal as possible. A lot of businesses freeze and go into reactive mode during crisis situations, which can be quite damaging as you’re essentially waiting for a problem to arise before taking action. The best thing to do is to plan ahead and be proactive, carrying on with what you see as the new way forward for your business.”