Family businesses are the engine of the world economy and working with them has taught me to admire their values, their dynamics, and now more than ever, their resilience during times of volatility. A Spanish study indicates that 65% of them have had to apply for loans, more than 40% have had to reduce their payroll, and there has been a reduction in sales of 60%.
There is much to learn from them. Here three important lessons; how to navigate when you can’t see the horizon, how to involve your family members, and how to have a positive on impact your community.
Sailing off into the sea without GPS is possible - if we go together. Although it may seem like operating in the dark, it’s not impossible to find your way. A businessman in the food industry made the quick decision to donate his inventory to his employees so they could survive the quarantine. This type of example has been seen around the world. Other businesses have chosen to become hospital providers, given their increasing demand.
Another businessman worried about having to close his stores during this period, took the time to create an online store, and thus save jobs. These examples inspire us to reinvent ourselves with the products or services we have and visualize them online. For those who cannot do this due to the obvious limitations of their business, generating collaborative alliances has shown to be positive.
Save time and money with finances for everyone by being creative and thinking about reducing liquidity. An entrepreneur decided to employ his 'next gen' for positions that he would have to consolidate due to the reduction in demand. In this case, as future shareholders, they were willing to accept lower compensation, knowing that they’d receive future dividends.
Those with limitations on their businesses can offer their services with flexible remuneration now and project future earnings in a new market. Engaging the next generation, whether by giving them a job or with financial education in times of instability, can be productive for future growth.
There is an opportunity to innovate with impact. Many companies are improving their impact. One company is offering free online courses to its employees to improve their skills Other founders and CEOs are cutting their salaries to save their teams. Finally, companies that are not complacent about the opportunity to innovate, create new products and services in crisis situations.
Today more than ever, it is necessary to optimize the management of capital expenses, reduce cycles, systematize payments and invoices, negotiate discounts with suppliers, and more. It’s important to restructure obligations with banks to reduce outflows, consider paying only interest and postponing projects that are longer than 180 days. Maintain a weekly budget and shift focus from profit to cash flow. This is the time to have an efficient financial plan that involves your family and that is innovative and has an impact in your community.
Do you need support? Elaine King has extensive experience working with family businesses. Contact Elaine today to coordinate a virtual session!