Family Businesses and the Economic Crisis: Is Coping in the Blood
In September 2008, we ran an article entitled Family Business and the Economic Downturn (Green, Vol. XVII Issue 9). Since then, like most publications, we have carried numerous articles on the economy, acknowledging the challenges to business and pointing out the opportunities that may be particularly available to family owned enterprises. In fact, the consistent message has been that family businesses tend to perform better during times of economic turmoil than other companies. That seems to be the case worldwide. The Business Times Singapore recently ran an article entitled, The DNA of Survival, by Robert Yap, Chairman and CEO, YCH Group that made the same point.
Singapore, like the US, has entered into a major economic downturn, suffering from significant job losses and waning consumer confidence. Yap, a second generation owner of a transportation company started by his father in Singapore, said that “family enterprises possess a distinct DNA that can be turned into strengths.”
This is a point we have often heard from our clients. One of our consultants has said that many of the families he works with tend to have a “when times get tough, we get tougher” attitude that helps them forge through and survive economic turmoil. Others have commented that family businesses tend to be more nimble and innovative and that these traits help their enterprises during economic trouble. In addition, the long-term outlook of most family business owners “allows them to make the most of opportunities presented in the marketplace of failed competitors and shifting consumer preferences,” senior associate of the Family Business Consultant Group, Mark Green, said.
Another trait that many family enterprises share is they tend to have close employer-employee relationships. This closeness makes it less likely that family enterprises will revert to the common method of automatically cutting employees to reduce overhead during an economic crisis. In addition, Family business owners often exercise a greater sense of inclusiveness and treat employees as part of an extended family. These traits result in greater employee loyalty, which also helps family enterprises during economic turmoil.
To Yap’s point, there does seems to be a core set of values that many family businesses share that enable them to fare well during economic turmoil and to be in an even better position when the economy rebounds. As you look around your business practices and priorities, ensure you continue to invest in the family enterprise DNA, it serves you well when times are good and can protect your survival in the hardest of economic circumstances.
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