Here we are in the middle of the Latest COVID lockdown and family business owners are really hurting. For many, it has become critical to reassess their future survival and future opportunities. No one can be expected to operate successfully in business environment that is so unpredictable.
Not only do they tell me they lie awake worrying about future sales and cashflow, they are often leading a business based on personal emotions and complex interfamily egos, family turf wars and differing individual aspirations and personal ambitions. The shutdowns have now introduced a high level of personal stress and anxiety.
When the original founders started, usually as a husband and wife team, they only had themselves to consider and were often married to the business, working amazing hours. Now things are different. The family has grown and expanded and family group dynamics have come into play.
Following on from 2020, which we can only describe as the COVID year from hell, family business owners are faced with some key decisions they have never faced before. Business models need to change, supply chains have changed, consumer buying habits and attitudes have changed, the way we work has changed and technology is driving this at an incredibly fast pace.
In my work with family business owners, there are three fundamental questions. Especially since credible research from a large national accounting group and Family Business Australia indicates that only twelve percent of family businesses survive past the second- generation.
Family leaders must decide. Do we just continue as we always have done in the past? Do we look to find a buyer and exit the business? Do we, or can we, transfer and transition the business to the next generation and accept that change is necessary?
Recently, I have been involved with families in regional construction, hospitality, artisan food and local engineering who have struggled and cannot see a light at the end of the tunnel. However, there are others in food manufacturing who have been hit hard initially and then rebounded. The latter are examples of those who stopped and reassessed their situation, have been bold in making change and are now beating their pre COVID results.
My best example is a family business in agribusiness who initially lost sales and clients in 2020 and quickly brought the senior team together and decided to make some tough people decisions, reassess their channels to market, adjust their product range, raise their gross profit margins, upgrade their technology and revise their short term and long-term business gaols.
The lesson learned for family business is those who had always ensured they communicate with each other, have maintained cash reserves and a good balance sheet prior to 2020 have been able to survive last year and now have a chance for surviving past 2021.
Bill Winter is a renowned business mentor for business owners. He is a facilitator of the hard to have business conversations.