Family-and-founder-owned businesses should be looked at as bellwethers of the economy and business owner health. Now that the original wave of PPP money is gone, many of my family-owned-business friends and clients are experiencing a series of smaller— but in many cases more dangerous— shocks related to the COVID-19 crisis. Prolonged impacts to revenue and profitability, access to capital, and retention of employees are driving entrepreneurs to the edge.
Family-owned businesses tend to move more slowly than their larger, publicly-traded counterparts. Sometimes, this is good and other times it is dangerous. A prolonged COVID-19 crisis has forced business owners to make choices that were previously unthinkable. The most painful of which usually involves employees.
It was not that long ago when the biggest beef small businesses had was "finding good employees." Those same business owners are now faced with the difficult decision of who to let go. Family-owned businesses tend to hang on to their employees longer during a crisis compared to bigger companies. This can be a fine strategy that leads to increased employee loyalty in the long run, but taken too far, can be dangerous. Many entrepreneurs who have said to me "I have never laid anyone off whom I didn't want to leave" are going to have to change their tunes. Don't let a paternalistic quirk have you using your credit cards to make payroll (I'm not making that up). I'm not advocating for mass layoffs. I'm simply saying that you need to have some objectivity when you look at a business that is being impacted by a crisis, and the answers might not be pleasant.
The other hand-wringing, anxiety-provoking issue that many small businesses face right now is access to capital. I'm guessing you didn't build the projections that you gave to your bank/lender with a pandemic built in. Access to capital with a declining income statement is a serious issue. If you are a family-owned business, it can mean personal guarantees or capital calls— both of which can create disharmony within a family.
Difficult times always increase family conflict. A family that is very used to a certain level of return or dividend from a business might not see that in 2020. In addition, the family business can also be a huge part of the family's identity, so that when results begin to dip, so does the family's security and sense of well-being. Try to steer clear of family conflict if possible during this time, but don't do this at the expense of communication. As always, a transparent review of business results and strategy with other family members is the best policy if you are able to do so.
Speaking of anxiety inducing family conversations, remember to take care of your health. You should not be taking medical advice from an M&A advisor, but remember, anxiety increases blood pressure. Add to that the COVID-19-related snacking and inability to go to the gym. All kidding aside, my family-owned businesses leaders have a greater burden of responsibility in so many ways than their publicly-traded peers, and it is difficult to find healthy ways to accommodate your business and family needs. Take care of yourselves!