Canada’s family enterprises form a powerful economic engine that employs 6.9 million workers who generate $574.6 billion annually to GDP. Quite simply, family businesses matter. Especially so in our new pandemic economy. As the national community for business families, Family Enterprise Xchange is here to support family enterprises and help them thrive.
In June, FEX gathered insights and opinions at regional roundtable discussions with business family members from a diverse range of family enterprises representing a variety of generations, industries and experiences – all dynamic entities that help drive our economy.
The following is snapshot of our discussions highlighting the tactics family enterprises are using to adapt, as well as their economic and policy expectations for tomorrow. Many are embattled. Some are thriving. All are tenacious and making a fresh push towards creative economic resilience.
- Decisive: Clearsighted rapid action has delivered a measure of solace to family enterprise owners who have moved quickly to protect cash flows and liquidity, mitigate risks to supply chains, diversify and pivot their business models where possible.
- Forewarned is forearmed: Broadly, families have been here before. Those with emergency protocols in place following past SARS and H1N1 crises, have acted nimbly. Others, those in “resiliency mode” since the 2008 downturn, are coping more ably with the crisis by virtue of existing business continuity plans.
- Family values: Committed and community-minded, several family-owned enterprises have been reluctant to lay off employees. Many are leaning heavily on contingency plans to save jobs and have reduced their own income long before laying off or reducing employee incomes
- Tighter governance: A sharper focus on governance, emphasis on stronger communications and employee transparency, as well as initiatives to diversify supply chains and markets has families discovering new ways to face new challenges.
- Action and optimism: Owners are doing what it takes to ride out the storm. Few have managed to sustain revenue at satisfactory levels; many expect lower sales in coming quarters. However, some are reporting minimal losses or year-end upturns thanks to pivoting to new business lines.
- Liquidity and agility: Some enterprises have struggled to reconcile deferrals granted to balance-owing clients against their own tax payment obligations, yet others have successfully renegotiated payment terms with clients and suppliers, adding financial breathing space.
- Prudent cuts: Owners are deploying targeted cost-cutting measures to survive: Pay cuts for ownership teams and/or employees; shorter work weeks; temporary layoffs and combinations thereof are helping to weather the downturn. Some have cut workforces by 90%, others by as little as 10%.
- Targeted controls: Encouragingly, there are instances of enterprises that – by virtue of prudent cost controls, moves to pivot, and e-commerce initiatives – expect to weather the crisis for multiple quarters.
- Multiple lifelines: For the few family enterprises reporting strong cash flow positions, they attribute this to a combination of tactics: use of government relief initiatives, loans, and their own cost-cutting.
- Technology matters: Business owners have stepped up videoconferencing and are better leveraging “online relationships” in general. Others are reaping unexpected rewards of e-commerce investments in the form of enhanced technical proficiency among staffers or discovering new efficiency gains.
- Tech the enabler: Some owners cite limitations of virtual meetings (some clients are better served in person) but it is difficult to discount technology as a revenue enhancer, so proprietors are taking fresh and open-minded looks at new tech deployments.
- Home-working: After an adjustment period, the advent of home-working (a result of social distancing rules) has garnered favourable reviews from owners who report welcome gains in staff productivity.
- Renewed purpose: While some companies are actively seeking new markets for their products, others are seizing opportunities to launch new businesses or are discovering a renewed sense of purpose/direction in the family enterprise as a result of crisis-driven brainstorming initiatives.
- Greater recognition: Conscious of their resilience and value to the economy, family enterprise owners doubt whether policymakers truly grasp how vital their contributions are – a fact policymakers should increasingly acknowledge.
Thank you to all of the family members who participated – sharing their thoughts, recommendations and experiences – so others may learn and grow. FEX will continue to gather the views of the family business community throughout the fall with roundtable discussions, research and peer-to-peer conversations. But please don’t wait to share your thoughts, opinions and experiences – your community is here, reach out! Join a family meet-up, visit the FEX Community Feed, engage in the conversation and help build a strong voice for family enterprise in Canada.