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The volatility and economic impact of COVID-19 can be seen across sectors and industries. From big shifts in stock markets, gold prices to loss of jobs and disruption of business activities, the aftermath of COVID-19 is severe as everyone is still reeling under the weight of the pandemic. Family businesses and small business owners typically show high resilience in such uncertain and challenging times. However, with a well-laid-out strategy and some planning, they can further alleviate the blow of COVID-19 and the economic slow-down. Here are some ways in which family businesses adapt to the new normal:
1. Use an inclusive approach to decision making
Trust is one of the essential currencies in good governance. Challenges such as the pandemic often present an opportunity to leverage the collective wisdom of your workforce. Taking important decisions by including some of the key stakeholders of your business can help you cover adequate ground and rule out any risks by oversight. Additionally, it fosters a culture of transparency and collaboration, which is essential in an all-hands-on-deck situation.
2. Safeguarding liquidity
In dire times, maintaining healthy levels of liquidity is one of the most important factors that can help family businesses stay afloat. Ensure you are taking the right steps to improve your balance sheet so you can navigate through any turbulent times ahead. Improve the rigour of your collection processes to expedite receivables. Some measures that can help strengthen your balance sheet include reducing costs where possible, for example, variable costs, prioritising cash generation over turning a profit and focusing on the cash to cash conversion cycle.
3. Evaluate your business model
The new normal has transformed the working model of several businesses and industries. This is the right time to take stock of your business processes and operating model to assess its long-term feasibility. Do you need to pivot? Whether in terms of products, services, channels or your core revenue model, it is useful to understand how your business will look and work post-pandemic. Identify your most important stakeholders from the supply chain to the customers and how their behaviour will change after the pandemic to help shed some light on this question.
4. Focus on innovation
Many family businesses have embraced innovation and change after the pandemic, forcing them to adapt to a new way of doing things. For many businesses, it means digitising legacy processes in the new contact-less paradigm. Evaluate your business needs and use quick and agile thinking to stay ahead of the curve and impending threats. This is a good opportunity to adapt products and offerings to diversify into new markets if possible.
5. Stick to your values
Family-owned businesses have the unique advantage of experience and surviving past crises. This is because core values and purpose are the building blocks and foundation of their success, commitment and longevity. Before making important decisions, ponder if they are aligned with your business values. This can help sustain confidence in the business through the crisis. Communicating your values-based decision-making approach through the appropriate channels will inspire further trust.
6. Define business/ownership continuity
While succession is critical to the continuity of a business, it is typically a drawn-out process. In times of crisis, quick and effective planning demands establishing emergency plans and clear leadership transitions. The younger generation has a vital role to play in business and family. Put clear transition plans in place, including the review of wills and legal matters.
Family businesses are inherently resilient. Effective crisis governance needs transparency, communication, risk management and aligning decisions to the core values and long-term vision of a family business.
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