Over the past two months, I have watched my father and husband work tirelessly to protect our businesses. We have struggled to retain our staff, pay their wages and bolster their spirits. Throughout the ordeal, we’ve been in constant communication with other family businesses in our circle, applying the logic that similar challenges have shared solutions.
These transformative conversations have me convinced that family businesses are more than just resilient enough to bounce back from a post-pandemic economic crisis; they will emerge as leaders in their respective industries and geographies. Here are five reasons why:
1. Frugality will be Celebrated
The family business mentality is, typically, uncomplicated: watch the costs, and the profits will follow. What some see as basic and rudimentary business practices can, in fact, be viewed as frugality, innovation, and astuteness. Outsiders often view family businesses as unprofessional and far from modern, criticising them for counting every single penny, to the point of appearing stingy or particularly tightfisted. Of course, there may be some who fit the negative stereotypes, but on the whole, family businesses demonstrate far more responsibility and accountability toward their business and their customers given just how much is on the line. Because the family name is directly attached to the firm’s reputation, the stakes for the business owner are incredibly high. The business represents their livelihood, reputation and legacy. Therefore, there is added pressure for the business owner to carefully reassess spending and act in an organized, thoughtful, and responsible manner.
2. Small will be the New Big
Despite their small size, family businesses play a significant role in keeping local, regional, and national economies afloat. Add to that the family-element with family-managed SMEs and you get a deep network of personal and professional ties that keep communities engaged, active, employed, productive and connected in a way that corporations simply cannot. Smaller family businesses offer multi-dimensional fulfilment along professional, personal, and familial dimensions – something many corporates cannot.
A common criticism lobbed at family businesses is that they are unsystematic in their approach to daily operations, and simply conducting business haphazardly. It is true that, compared to larger organizations, a small or medium-sized family firm is less likely to have a specific network of policies and procedures in place. However, their less rigid approach can be an advantage. The “top person” is directly involved with the business. Decisions can be made quickly, and negotiations do not require countless approvals to move forward. These firms do not face as much red tape as large corporate entities and can work more closely with clients and stakeholders to get to the bottom of issues they face. Their “unconventional” approach to problem-solving in business is simply innovation in the face of limited resources; this creativity will be celebrated, not condemned.
3. Local will be Focal
With many travel and transport restrictions in place, local companies, businesses and experiences will become central to economic growth. People will appreciate and support that which is immediately around them. They will want to source from local family-owned businesses and invest more in exploring their own neighbourhoods. Family business already have the unique know-how and the historical context to leverage for this increase in all things local.
4. Staff Retention will Become Crucial
In successful family businesses, employees are considered family members, which helps them feel empowered and connected to their work. It also helps foster informal support networks. This sense of community and security helps build the confidence, independence, trust, and satisfaction of employees, inspiring them to contribute even more.
Family businesses, known for their emphasis on relationships and people, have historically connected with their staff on a much closer level. They will be best suited to retain labour and staff and emerge as the employers of choice in a world where foreign workers have returned home, and job security reigns supreme.
5. Agility will be Key
Unlike corporations that will need to rebuild from the ground up on much larger scales, family businesses have the freedom and flexibility to regroup, refresh, and rebuild in a more agile way. Moreover, given the fact that family businesses typically do not have rigid boards, the leadership in the company has more independence to make the critical decisions needed to adjust to changing market realities.
Corporations may be trying to guarantee shareholder value first and foremost during the crisis, but family businesses, by nature, must focus not only on their bottom line, but also on their employees and long-term sustainability. These businesses are used to tough times, risk, and failure. Family businesses in the Gulf have already pivoted assembly lines away from existing products to produce personal protective equipment, ventilators and other needed materials to help healthcare workers fight COVID-19.
Whenever the pandemic finally begins to recede, family businesses will be at the forefront of economic rebuilding. By then, hopefully all firms, regardless of size, will have learned to be more resilient, adaptable, lean and creative, and on those fronts, they can take their cues from family businesses.
