Family-owned retail chain stays strong during pandemic

Robert Matthews (Matt) Beall III’s promotion to CEO of Beall’s Inc., a retailer based in Bradenton, Fla., was announced in December 2019. Just three months later, the COVID-19 pandemic struck the United States. Beall, 41, oversaw the temporary closure of the company’s more than 550 stores, which operate in 17 states under the names Beall’s, Beall’s Outlet, Burke’s Outlet, Home Centric and Bunulu. Beall and his wife, Krystel, were caring for their newborn baby as governors lifted stay-at-home orders and Beall’s stores reopened.

That is a lot for a leader to contend with so early in his tenure. But Beall, who represents the fourth generation of the founding family, says he's had plenty of experience meeting challenges.

Beall, who had worked for Beall’s Inc. as a college student, started his career at Ross Stores in Manhattan as an assistant buyer. He began that job in 2001, just days after the September 11 terrorist attacks.

From the time he joined the family business in 2004 as a buyer for Beall’s Outlet stores, Beall says, the company has continually faced disruptions, including the entry of Kohl’s, a new competitor, into Florida as well as the ecommerce explosion.

“We're always dealing with external factors,” he says. “There’s always something in retail.”

Yet the shuttering all the company’s stores for an average of six weeks was an unprecedented situation. Sales from ecommerce, which ordinarily generates only about 10% of the company’s revenues, rose while stores were closed, but not nearly enough to make up for the lost brick-and-mortar business.

“You have bills to pay during that time, of course,” Beall says. So you're essentially either paying from borrowed money or you're paying from a cash position. And that's why so many retailers are struggling right now — they didn't go into the pandemic with a healthy business, they went in with debt.”

That was not the case for his company, Beall notes. “We came into the crisis from a position of strength.

“We knew that we were 10 years away from the last recession and that we wanted to get through the next recession, whenever it would come. You never see it coming, of course.

“So how do you prepare for it? Well, you have to shore up your balance sheet. We've spent the last 10, 12 years since the Great Recession doing that. And when you're able to do that, you're able to survive.

“I think the reason that we've been around for 105 years is that we've never run out of money,” Beall says. “I credit the team for that, and their ability to manage our resources. And I credit our loyal guests for that — the fact that they love shopping with us and they love the fact that we give back to the community and we're here for the right reasons.”

Decisions and preparations
Some competitors remained open while Beall’s Inc. stores were closed. “We wanted to do our part to stop the spread of the virus,” Beall says. “We’re happy with the decision, and proud of the decision. The feedback was overwhelmingly positive from our employee base as it related to how we handled things. They were always front of mind for us, keeping their best interests at heart. That's just a part of our culture.”

The company’s senior executive committee had daily videoconferences as the stores began to close. “As things sort of settled down, we were able to refocus more of our energy towards our teams and getting ourselves prepared for what the future might look like,” Beall says. Scenario planning helped the executives make financial decisions.

Beall took no salary while the stores were closed. Store managers initially received full pay and then were paid at a reduced rate. Hourly employee pay was eventually cut, but those employees were given special “leave hours” and could use accrued vacation or sick time to help supplement their income. The company continued to pay its portion of employees’ medical benefits.

Beall’s Inc. followed governors’ guidelines for reopening in each of the states where it operates.

“What we were talking about as a team while we were closed was, amongst other things, the best and safest way that we could reopen our stores. We wanted our guests to have confidence in the fact that we were clean and that we were a safe place to shop,” Beall says.

“We implemented a lot of new practices and invested in cleaning materials and in people to help us scrub the stores down,” particularly in high-traffic areas. Fitting rooms remain closed.

Employees are required to wear masks in the stores, though customers are not.

Beall is the only family member in management, though two family shareholders serve alongside him on the board of directors. He says the family agreed that closing the stores was the right thing to do.

The business adheres to six “Beall’s family values”: “We are grateful, we are genuine, we act with integrity, we’re here for each other, we demonstrate respect for all, and we strive to exceed expectations.”

“When you have those core values, it makes the decisions very easy to make,” Beall says. “And there was really no disagreement at the management level about any of those decisions.”

Since the stores have reopened, business has been “surprisingly positive,” Beall says.

“What people want has changed since the virus struck,” he says. “I think the merchant team’s [efforts] to figure out the supply and the demand on a department-by-department or category-by-category basis has been instrumental in our ability to react quickly to a changing world and to shore up our financial position.”

In response to the social unrest following the killing of George Floyd by a Minneapolis police officer on May 25, Beall sent an internal memo to company staff. “We didn’t do a press release or anything; we’re sort of a private company,” he notes. “But we felt that it was right to state how we felt about the topic and not be silent on the topic. Certainly, we feel a lot of sadness for all of the events that have occurred. We support the peaceful rallies that are happening across the country and hope to end racism. “

Family pride
Many of Beall’s Inc.’s competitors have been acquired by public companies, and some of those stores are gone forever. Beall says his company’s status as one of the few family-owned chains left standing isn’t causing him to feel pressure.

“There's a lot of people in this world that are under a heck of a lot more pressure than I am,” he says. “I'm extremely grateful to be in a position where I'm able to lead a very talented group of people and enjoy my job.”

The company’s continued survival is a source of pride, Beall says. “it just seems like every day that I show up to work, I become more grateful and have more pride in the business than I did the day prior. And I think that that was accelerated, like a lot of other things, throughout this crisis.

“I think that that's probably a difference between a family business and a public company. We're really making decisions for the long term. We want our business to be around and to survive for future generations. And we're here for our people — we're not here for Wall Street; we’re not here for a quarterly profit. We're here because we have a tremendous sense of responsibility for our people in the communities that we serve.

“I think that one of the biggest reasons why we've been able to survive a lot of these crises that we've been through in the last 100-plus years is our family shareholders and the great pride that they take in the business.

“When you're selflessly making decisions because you know that it's for the betterment of the business long-term, you're going to be able to survive through a lot of challenges.”

Planning opportunities for these unprecedented times

This year, as the COVID-19 pandemic has upended our lives, our attention is focused on the wellbeing of our families and loved ones. Because their futures are our top priority, there may be no better time than now to begin estate planning. 

The biggest question to consider is whether you are willing to give away assets and the income produced from those assets during these unprecedented times. From a financial perspective, asset values and interest rates may never be this low again, and certainly the tax benefits may never be greater. For 2020, the federal exemption from estate and gift tax is capped at $11.58 million for individuals or $23.16 million for a married couple. This exemption, which was enacted by the Tax Cuts and Jobs Act in 2017, will sunset Dec. 31, 2025, and revert back to $5 million (indexed for inflation).

Notably, the IRS confirmed that any gifts made will not be “clawed back” after the sunset date if they exceed the reduced exemption amount, provided they are not in excess of the upper limit. Individuals can also make gifts to their children using the annual exclusion, which could be essentially tax-free, if properly documented. That means that for 2020, you and your spouse could jointly gift $30,000 to each child.

However, if a new president is elected and control of the Senate changes in November, the estate and gift tax exemption could be at risk. New lawmakers may reduce or eliminate the exemption altogether to help pay for coronavirus-related government spending this year, or they may let it revert to the $5 million amount sooner than 2025.

You might be thinking that you have a few more years to gift the value of the business to your children. But if your business valuation is based on the income method, it is probably greatly reduced given the current economic situation. It is possible that your business is currently worth only 60% of its previous valuation. That reduction gives you an opportunity to gift your children much more ownership. As the economy recovers, the value of your business should “grow back” over the next few years. Making the gift to your children now, whether directly or in a trust, also saves any future estate tax on the appreciated value in excess of the federal exemption. 

Low interest rates create another opportunity for estate planning. Many estate planning techniques utilize a monthly interest rate set by the IRS, which is determined based on a number of economic factors. This rate is at historic lows, and gifts of assets are likely to appreciate at a greater rate over the long term as the effects of the pandemic subside. By transferring assets directly or putting them into a trust for your children now, it locks in at the current low rate. Then, if the value of the assets appreciates at a greater rate, more wealth can be transferred from your estate without gift tax.

Should you pursue gifting, it is important to work with your certified public accountant (CPA) and attorney to evaluate gifting options and related estate tax savings and to determine if they are worth what you are giving up today. In addition, your CPA can file a gift tax return to document the gift with the IRS, and your attorney can help document the transaction.

Estate planning and gifting to loved ones are important decisions. This may be a time of great  uncertainty, but it is an optimal time to plan for the future of your loved ones.

Mark Bernstein is the partner-in-charge of the New York office of Katz, Sapper & Miller, a consulting, tax, and accounting firm ( He helps high-net-worth individuals, family offices and real estate owners navigate tax and financial issues to achieve their goals. Danielle Justo is a shareholder at Rich May, P.C., a law firm in Boston. She is the co-chair of the firm’s commercial real estate practice group and practices in the tax & real estate planning group (


Eight actions to secure your family’s future amid COVID-19

For enterprising families during the COVID-19 pandemic, it’s important not only to stay connected as a family, but also to ensure the family enterprise will survive and thrive. “The foundation for this involves investing in the family’s human and social capital,” notes Jeremy Cheng, founder of GEN+ Family Business Advisory and Research and a Ph.D. student at The Chinese University of Hong Kong.

In an article in FFI Practitioner, a weekly online publication of the Family Firm Institute, Cheng offers some suggestions to help you not only manage your family business through the pandemic but also shore up your enterprise for the future.

Here is Cheng’s advice, based largely on his observations of Asian families who experienced the first wave of the pandemic.

1. Know what assets you have
When the senior leader is the only one with a complete picture of the family’s holdings, the family enterprise will be slower to respond in a downturn. Keeping information from advisers — and sometimes even from other family members — also hinders holistic risk assessment.

2. Keep your family wealth in the right hands
The comingling of family wealth with corporate money can create cash flow issues in the operating business and potentially impinge on family members’ lifestyle.

3. Share your burden
Check in regularly with the broader family to see how they’re doing and keep them informed about the financial health of the business. Discuss the impact of developments on the family and other stakeholders and work to develop a shared response. Honest communication will build trust and enable family members to help each other manage anxiety.

4. Refocus on your family’s natural strengths
Successful enterprising families take a long-term view of business stewardship. This may be a good opportunity to make investments to diversify the business or prepare for growth after the current crisis.

5. Act like a portfolio owner
Rather than focusing on long-term survival of the legacy business, consider the value of the family’s entire portfolio. Think about the economy of the future — what investments or divestments will best position the business family for success?

6. Develop generational immunity in the family governance system
Help your family prepare for the next crisis by creating a living governance system. Members of succeeding generations must develop their own agile leadership, and learn to work together to make decisions.

7. Review and renew
Conduct a risk-assessment analysis of your family governance system to see what elements need to be strengthened. For example, do you have a crisis-management protocol?

If you’ve developed new ways of keeping the family informed during the COVID-19 pandemic, will you continue them after the crisis has ended? What lessons can you draw from this experience, and how will you teach them to future generations?

8. Watch for real transitions, not simply resilience
Some of the changes wrought by this crisis will be permanent, so future success will require more than the ability to bounce back from an unpleasant event. It’s important to reexamine why you stay together as an enterprising family, how to foster entrepreneurship and what you need to do to engage the rising generation.

Read the full article here.

Family firm with roots in Colonial America makes PPE

The Merrow family of New England have altered their business over the centuries, from a general store to a gunpowder maker to a sewing machine manufacturer to a maker of technical apparel. During the COVID-19 pandemic, the 182-year-old company has shifted gears to increase its production of personal protective equipment (PPE).

Joseph Merrow started making gunpowder in Connecticut, 24 miles from Hartford. After his powder mill was destroyed in an explosion in 1837, he built a knitting factory and started turning out knit cotton goods in 1838.

In 1868, the founder’s grandson Joseph Millard Merrow developed the Merrow Crochet Machine. After the factory burned down in an 1887 fire, the company pivoted again, moving to Hartford and focusing on overlock sewing machines. The company expanded its line of industrial overlock sewing machines, used to overedge fabric and add decorative edging. The business was renamed the Merrow Machine Company, and Joseph Millard Merrow became a major figure in the textile industry.

In 2004, eighth-generation brothers Owen and Charlie Merrow bought the company and moved it to Fall River, Mass., where it operates in a 300,000-square-foot building. Merrow Group now encompasses several companies that specialize in making sewing machines, contract manufacturing of technical soft goods and fashion design and development.

During the COVID-19 pandemic, the enterprise is playing a crucial role. It has hired more workers and increased its production of medical protective equipment, which it’s selling to hospitals, healthcare networks and local government systems.

Merrow has received funding from the Massachusetts Emergency Response Team (MERT) to support expansion of its production capabilities to meet the urgent demand for PPE.

“Merrow was one of the first companies to pivot their operations during this extremely critical time,” says Carolyn Kirk, executive director of the MassTech Collaborative, the agency heading up MERT. “Merrow quickly ramped up production and is now producing gowns that provide critical protection for our frontline healthcare staff and first responders. We’re grateful to Merrow and the other companies the MERT has assisted, as they provide reliable, local sources of PPE and other critical supplies that are undoubtedly saving lives.”

CEO Charlie Merrow says that each week the company produces several hundred thousand gowns and increases production by 20%. 

“We are working 18-hour days and sending out dozens of shipments,” Merrow says. “Nonstop, truck after truck pulls up to the loading dock getting PPE, but it’s never enough.” You can hear the frustration in his voice as he says that they could do more, but because of plant closures, supply chain markets are fluid. Merrow says he ordered a million yards of fabric but found out it was sold to someone else for more money.

His goal is building a supply chain to support the entire country, and he’s experimenting with different ways to scale up. Merrow is now shipping to 16 states. In addition to gowns, the company is making other essential medical products, such as surgical caps and gaiters.

“This is the most difficult professional time of my life, but I’m proud of the way the company has been able to execute,” Merrow says.

Lisa C. Johnson is a writer based in Massachusetts.

Jelmar’s supply chain holds steady during pandemic

CLR and Tarn-X cleaning products sold by Jelmar, a family company, are popular with consumers during the COVID-19 pandemic, the company reports.

“Our bath and kitchen cleaner and our mold and mildew remover are both in high demand right now,” says Alison Gutterman, third-generation CEO of the Skokie, Ill.-based company. CLR’s Garbage Disposal Foaming Cleaner, Stainless Steel Cleaner and Stone Cleaner have also been strong sellers, she says.

Unlike Clorox and Lysol products, which are hard to find these days, Jelmar’s offerings are not disinfectants. Gutterman explains that Jelmar products should be used to clean household surfaces before disinfecting products are applied. 

The company, one of the first to use the tagline “as seen on TV,” introduced a new advertising campaign in March, featuring 15-second commercials shown during highly viewed programs, including some in prime time.

Since its founding in 1949, Jelmar has outsourced the development and manufacturing of its products. Unlike other makers of household products during the pandemic, Jelmar has not experienced any supply chain challenges, Gutterman says.

“We have really, really great partners that we've had for a number of years,” she says. “And because we have such a great partnership with them, they know that they need to keep us in stock. The owner of the plant has added shifts to accommodate our increase in sales.

“I have to give a lot of credit to my staff and to our purchasing agents and to our quality-control people. They really are doing a phenomenal job of making sure that we're fulfilling our orders on time. And we just keep on manufacturing and shipping.”

The company has a couple of new products in development with a targeted launch date in early 2021.

Gutterman’s staff of about 20 includes two new employees who started before the pandemic reached the United States. 

Though most of the team is working from home, “we were able to incorporate two different employees during this time and have them really feel like they're part of our culture,” Gutterman says.

To keep up morale, she has established themes for the weekly staff meetings that are held via Zoom. During one meeting, everyone wore their favorite hat. At another, staffers traded suggestions for movies or shows to watch on Netflix. Recently, colleagues offered recommendations for take-out restaurants to one of the new employees, who had moved to the Chicago area from New Jersey.

The other new staffer, who works in the plant, has had a “trial by fire,” Gutterman says. “His onboarding was, ’OK, we’ve got to ship all this stuff out; we can’t be late. You may have to work longer hours, because we've got to make sure that we're maintaining our supply chain.’ ”

To keep up morale, Gutterman gathered her team on a street near the company headquarters one day in May, “and we had a little parade,” she says.

“We had balloons. We had candy that we threw at them, and we had signs and champagne and other spirits — just to make sure they knew that we are so thrilled that they're working for us.

“I've sent out care packages with great snacks to all of our employees. We're really trying to make sure that they feel the love. We’re connecting with them all the time, and it's been really seamless.”



Herschend prepares to open its theme parks

Family-owned Herschend Enterprises, which delayed the openings of its theme parks because of COVID-19, is currently evaluating opening dates for the summer.

In addition to theme park operator Herschend Family Entertainment, the family enterprise includes tour operator Pink Adventure Tours; Herschend Live, owner of the Harlem Globetrotters; and Herschend Entertainment Studios, which produces shows for children.

The opening plans have been revised several times to incorporate new information and evolving developments, according to Chris Herschend, chairman of Herschend Enterprises.

The decision to delay the openings, by contrast, was “kind of iterative” and made over a period of less than three days in March, Herschend says. “It went fast.

“It went from, ‘Do you think this could happen?’ to, ‘Oh, my gosh. They just canceled the NBA season,’ to, ‘We can't open tomorrow.’ “

During those days, Herschend spoke multiple times a day with Andrew Wexler, the non-family CEO of Herschend Enterprises. Wexler was in Dollywood, the Pigeon Ford, Tenn., amusement park, where co-owner and namesake Dolly Parton had planned to attend the season opening scheduled for Friday, March 13.

As of Monday evening, March 9, the country music star had confirmed her attendance at the opening. On Wednesday, March 11, Parton canceled. On Thursday, March 12, Disney announced it would close its U.S. parks starting the following Monday. By Thursday night, Herschend had decided not to open its parks.

“It couldn't have happened at a worse time,” Herschend says. “We work all winter. We put capital into the ground. We put expense on the company to bring back all our seasonal workers. We rehire. We get everybody trained.

“March is always our worst balance sheet of the year for those summertime businesses.”

The timing was bad for the other business units, as well. March is a peak month for Pink Jeep tours and a time of high turnout for Globetrotters events.

“This is a complete full stop,” Herschend says. “It's been existentially threatening in every possible way.”

After the decision was made to stop all business activity, he says, “There was a release. You feel for a moment that you've made the tough decision. And then about a minute later, there's the dread: ‘Oh, my gosh. Now what do we do with all our seasonal employees?’ ”

Steps to save the company
The company moved quickly to institute furloughs. “All our non-furloughed employees took a 50% pay cut, and Andrew and I took 100%,” Herschend says. Subsequently, “we made a second round of cuts that went deep into the year-round staff.

“We're expecting them to come back. But still, we've never done anything close to this scale” in the 70-year history of the company.

Staffing was slashed to just 5% of what it had been a year earlier. “That was agonizing and brutal,” Herschend says.

“The employees that remained after the furloughs are working harder than ever, and we are eager to restore them to full pay, which we hope to do very soon,” he says.

The company is covering premium payments for furloughed employees who were eligible to participate in the health plan. “This is one of several things we did to try and ease the transition to unemployment benefits,” Herschend says.

“We didn't even have a board meeting until April 2 because it was so obvious what had to happen,” he says. “We had to focus on survival first.

“We were under-levered compared to our peers, but we were still in danger of not surviving if we didn't rapidly cut costs.”

The shareholders wanted the company to remain independent, without taking on outside investors, Herschend says.

Capital investments were delayed for a year or more. Lack of investment in the attractions “hurts our guests, but also our employees,” Herschend notes. “The growth rate slows and their compensation drops as a function of that. We don’t do it lightly.

“We don't even talk about financial performance right now. All we talk about is cash flow and survival.”

Keeping family in the loop
As Herschend and Wexler discussed the park closures, Herschend kept in touch with family members via a secure messaging app.

“They were asking me questions in real time. And I was able to answer some and pass some on to Andrew,” he says. “There was a lot of communication and it was really a blessing because it was super-efficient.”

The family knew about the decision to close the parks before it was officially announced. “All they wanted to talk about were employee issues and how we're going to care for our employees,” Herschend says. “And that was really our focus as a family for about two weeks. We didn't have any discussions about profit or loss or anything other than, what do we need to do for these people in the first, first wave of decisions?”

Several family members made personal contributions to Share It Forward (SIF), a 501(c)(3) non-profit organization that assists Herschend Entertainment employees in times of personal crisis. Those contributions from family members exceeded $800,000 in the days immediately following the first furlough announcement, Herschend says;

“What was so encouraging was that it was from individual households, not through any formal coordinated or centrally controlled entity or foundation.” SIF then made “immediate one-time payments to any furloughed employee who asked, in addition to its normal hardship mission, which was subsequently expanded to provide more effective assistance in the context of COVID impacts,” Herschend says.

Careful planning
Plans for opening the parks are being driven by the management teams. The board has provided input, and the plans have been shared with the family.

“The employees, the guests, the balance sheet, the stockholders — everybody benefits by us being open,” Herschend says.

Because of the changing body of knowledge about the spread of the virus, proper precautionary measures and government regulations, “It’s the most dynamic decision-making environment I’ve ever seen,” Herschend says.

“The professionalism and the depth of preparation and the care and the quality from the management teams is a huge confidence builder.”

Direct communication
In some ways, Herschend says, the current situation is analogous to the Great Recession of 2008 because of the effect on every industry across the board. On the other hand, he notes, “In the worst of ’08, we never had a week when we had zero revenues.”

One lesson that has emerged, he says, is “the need to communicate humbly and quietly to your stakeholders — and a lot.

“People value transparency and frequency of direct communication. And nobody needs you to tell them all the reasons they should be optimistic.

“People can be trusted with bad news. And especially in this case, there's so much of it. They didn't want me to be a cheerleader.

“Now, I couldn't be a pessimist. But I could definitely be a realist. I spoke as plainly as I knew how. And the family has responded really, really well. They've been great for one another and to each other.”

Company leaders knew that lenders would request the suspension of distributions to shareholders. “We got out in front of that — we told the shareholders we're doing this before the banks even asked us to,” Herschend says. Family members responded that they understood.

“We've done formal and informal video updates. We've done a lot of a lot of talking and chatting and communicating

“And I think it’s brought us closer together.”

Specialty Restaurants reopens some of its locations

Guests can once again reserve a table at Florida and Ohio eateries operated by Specialty Restaurants Corporation, a family-controlled company that owns 19 dining spots. In addition to Florida and Ohio, the company operates restaurants in California and Buffalo, N.Y.

John Tallichet, second-generation president and CEO of the Costa Mesa, Calif.-based company, says there was “a lot of pent-up demand” at the first restaurant to reopen, the Rusty Pelican in Tampa.

The websites of Tallichet’s eateries list the steps they’re taking to protect guests and employees from the coronavirus. The measures include checking employees’ temperatures, changing brunch buffets to an å la carte plated menu, providing sanitized utensils in individual wrappers, requiring staff to wear masks and adjusting seating and capacity to maintain 6-foot distancing.

“We've been communicating with our guests and sharing with them the different protocols that we have in place for their protection,” Tallichet says.

He says returning guests’ appreciation for the safety procedures showed on their faces. “It gave them a chance to come in and dine and feel like they could relax and not have to be stressed.”

Guests’ dining habits have changed, Tallichet reports. “You don't get the people lingering like they used to. They're excited to come in and have a meal and then get home.” That accelerated turnover rate has helped restaurant sales.

The Rusty Pelican reopened with outdoor-only seating because Florida guidelines at first restricted indoor restaurant dining to 25% capacity. On May 18, the state changed indoor dining guidelines to 50% capacity with 6-foot distancing. Some of Tallichet’s Florida locations are now seating diners indoors; others continue to offer outside service only.

“In Florida, we have sites that work well in this environment, because we have a lot of outdoor space,” he says.

Although California has been slower to lift its restrictions, the company is preparing for the eventual reopening of its restaurants in that state. Tallichet says of his California staff, “When they hear the stories and see the numbers that we're doing [in Florida], they are really pleased and feel like there's light at the end of the tunnel — that when they reopen, business will come back.”

The company is working on instituting an electronic ordering system to minimize close contact between guests and servers.

In early to mid-March, before most states began mandating restaurant closures, customers started to stay home, Tallichet says. “You could see with reservations, the numbers were starting to go down. People were starting to be concerned.”

His locations that had offered a Sunday brunch buffet shifted to å la carte brunch service before the closures. That helped staff and guests adjust to the change, which is still in effect.

Although restaurants were permitted to offer take-out service, Specialty Restaurants tried that option in only about five of its locations. “Our restaurants are very experiential, and it's tough to re-create that in a to-go setting,” Tallichet says.

The restaurants provided some meals for first responders and hospitals during the shutdown. “Being able to do that brought a lot of pride to the teams,” Tallichet says.

Input from the family
The company has about 12 family shareholders plus about 20 others with small percentages that date to the time when its shares were traded on the American Stock Exchange.

The company’s board of directors consists of its retired CFO, three family members and Tallichet. Another group, called board advisory members, includes other family members as well as two business leaders from outside the family.

Tallichet has kept them updated with conference calls that at first were held weekly and then shifted to biweekly.

“They definitely have a lot of input,” he says. Family members are dispersed throughout the country and weigh in on what’s happening at restaurants in their communities.

The company’s mission and values are based on the five-star rating scale commonly used in the restaurant industry, Tallichet says. The expectation is that employees, guests, the community and partners such as landlords and vendors will have a five-star experience in their interactions with the business.

“So it was important to the family that we were doing what we could for our employees, even though we furloughed them. We created a fund to assist them until they could get on unemployment. If employees needed produce or toilet paper or anything like that, they could come to the restaurant weekly, and we would give them what we had available.”

The family has real estate holdings in addition to its restaurants. Funds that had been set aside for real estate investments were reallocated to restaurant modifications and staff training to facilitate the reopenings. A Payroll Protection Program loan helped, too.

“I think [family members] recognize that this is not a short-term time period — it could be 18 months that we're dealing with this, and there could be another wave [of virus infections] and another setback,” Tallichet says.

Future shareholder distributions have been put on hold.

“All our people, including myself, took a pay cut,” Tallichet says. “So everybody's had to sacrifice.”

Branding your family business after the pandemic

The COVID-19 pandemic has altered the business landscape, resulting in both demand shock and supply disruption. In a matter of weeks, we moved from growth and expansion to a full stoppage of non-essential activities, along with universal concern about the health of our families, friends and co-workers.

Once the coronavirus pandemic subsides and we shift to the recovery phase, we will begin to focus on the resiliency of family-owned business names and brands. For multigenerational businesses, this period represents a reset — a time to retrench and revisit who they are, why they are in business and how they differentiate themselves from their competitors. It is a rare opportunity for family businesses to examine their core brand and company positioning.

Family businesses obviously want to make money, but most of them do not center their success only around revenue or shareholder return. They are also driven by the strong relationships between the family and long-time staff, as well as the service they provide to their customers and communities.

During this reset, families must recognize that these close relationships are a valuable part of their brand. Your brand — what people think about when they reflect on your company and its products or services — includes your people, the actions you take and the stories you tell. A brand that has been built over many generations can either be enhanced and elevated, or tarnished and torn down, by the actions taken right now. PwC’s “Future of Customer Experience Survey” (2017-18) found that 32% of all customers would stop doing business with a brand they loved after one bad experience.

During the long bull market ended by the recent pandemic, the primary focus for the family business was investing in output and sales growth. Branding was viewed as a marketing exercise — more tactical than strategic. However, as we restart the economy, family business owners must revisit their strategy. While no one can say how long this crisis will last, we do know that it has accelerated the pace of change, and there is no going back.

Brand position and strategy involve more than just logos, taglines, content marketing and search engine optimization. Enhancing the brand involves storytelling, consumer experience, positive actions, employee attitudes and reduced friction. In order to move forward, families should begin building authentic, resilient brands that focus on providing a memorable consumer experience.

How does your brand reflect the family, its values and mission? What actions are you taking as a business to “live” those values? Here are five questions every family should ask during this economic reset:

1. Why do we exist?
2. What do we stand for?
3. Who are our brand ambassadors? Do our employees love our brand? Do our customers?
4. How do we want to make our customers feel?
5. Why do our customers align with (and, therefore, buy from) us instead of our competitors?

Making strong connections with brand stories
During uncertain times, brand stories help consumers connect more closely with your company, as stories work on a deeper emotional level than data-powered marketing. Successful brand stories make the consumer the main character and make the company the guide. For example, during a recovery, expressions like “Buy American” take on new meanings.

Remember that your brand story is unique to your family business. Today, every brand functions as its own publication. Your company can produce content that can be shared daily via social media, weekly via email, and monthly via the web and digital content providers. Content can come from anywhere; everything in a family business’s day-to-day operations represents an opportunity to create content and customer value. Remember that consumers crave connections to brands they trust and value.

During a recovery, family-owned companies can be a catalyst for local, regional and national business activity. COVID-19 has highlighted the need for companies to position themselves for resilience. Just as family-owned businesses need to establish strong balance sheets and brands that stand the test of time, the U.S. economy must become more resilient through the growth of U.S.-based manufacturing.

Unfortunately, in the quest for efficiency, many businesses abandoned resiliency. That must change.

Family businesses need to become more robust, sustainable and resilient in the face of economic shocks and global forces.

They can play a central role in rebuilding robust supply chains and distribution ecosystems that ensure access to agriculture, raw materials, specialty equipment, parts and components. As brands, U.S. family-owned businesses are in an advantageous position to lead the way in rebuilding America.

Responding to change
As family businesses begin to determine the way forward, there are five questions every family should explore before rewriting or adjusting their brand position:

1. Who is our target customer?
2. What is our product or service category?
3. What is the greatest benefit of our product or service?
4. What is the proof of that benefit?
5. How can we hedge against future disruptions?

Family brands clearly must shift their positioning in response to the COVID-19 pandemic, as consumer attitudes and preferences are rapidly evolving with the changing landscape. Innovations and shifts in consumer preferences are already taking hold. Employees working from home, curbside pickup of five-star meals, rapid adoption of telemedicine and distance learning, virtual fitness, 3D printing and crowdsourced medical equipment design are examples of adaptive pathways that emerged in real time during the pandemic.

Family businesses must pay attention to these trends that illuminate the way forward, as we are now experiencing an acceleration of changes that were already under way. For instance, the pandemic has forced baby boomers to become rapid adopters of digital technology, closing the gap with digital-native millennials and generation Z. Grandparents now know how to use Zoom, order groceries online, watch streaming TV and movies, and even post on TikTok.

This shift, among others, will drive family-owned businesses to revisit their core strategy and brand position. They must ask themselves, “Are we optimally positioned to succeed in this new environment and competitive landscape?”

Brand positioning describes how a brand differentiates itself from its competitors, and where or how it should be perceived in customers’ minds. Consumer preferences are changing, supply chains are adjusting and technology is accelerating the pace of change. To respond successfully, family brands must focus on the evolving digital consumer experience.

The way forward
Family businesses will be seeking growth in the face of the current disruption, all while fending off old and new competitors. All company leaders must ask how their business model will be impacted — what are the second- and third- order effects of the pandemic?

Our playbook for the way forward includes a branding conversation that every family, founder, president and CEO can engage in:

1. Remember who we are and where we came from. Identify what we want our brand to be and then craft the right story to accurately project that image.

2. Ask whether our products and/or services reflect our brand. If not, we need to change them. Branding is a holistic process, and consumer experience is an important piece of that process.

3. Find out whether our partners and consumers digitally explore, experience and transact with our company in ways that are simple, efficient and pleasing.

4. Evaluate whether our product messaging reflects our brand. If not, let’s change it to reflect what’s authentic to our brand.

5. Examine our staff to determine whether they understand and embody our brand. If not, create a plan for changing that — a plan that includes communication, training and policies.

6. Evaluate whether our pricing is in line with our customers’ needs and expectations. Review fee structure(s) and terms to better align with our customers’ current reality.

7. Consider whether sales should shift from new-customer acquisition to focusing on current customers and their brand experience and needs.

8. Evaluate how brand messaging is delivered. The COVID-19 pandemic will accelerate the transformation to digital delivery of messaging. Is our business at the beginning, in the middle or toward the end of that transformation?

9. Understand that branding is a continuous process. Therefore, we need to continually refine, improve and adapt.

As your family business emerges from this pandemic, your most important asset will be your carefully crafted brand, which can enhance revenue growth and increase profits with greater efficiency. Equally important is your family brand’s ability to attract and retain its people. Well positioned brands with aligned employees promote resilience, longevity and customer loyalty.

R. Travis Coley is director, growth and strategy at Whitepenny Brand & Digital Strateg Ann Marie Liotta, CPA, AEP®, is U.S. wealth strategist at Cohn Financial Group, a division of Gallagher, M Financial Group Member Firm. Charlie J. Carr, CFP®, is managing director, Family Enterprise Advisory Services at PwC.

Practical steps you can take to help your business survive COVID-19

Conflict and disruption are woven deeply into the fabric of most family businesses. If there isn’t an external threat occupying the family’s attention, an internal one is ever present. Because of this state of existence — one requiring constant vigilance— family businesses are, in many ways, better prepared than their non-family peers to address an existential threat like COVID-19. But in family firms, since generally family members are the ones addressing these challenges, decision making is often accompanied by heightened emotions.

Although the current situation is perilous, there is a road ahead for family businesses during these troubling times. Here are some practical ways to navigate these waters.

Reducing liabilities
Most family businesses don’t enjoy considerable cash reserves. Income is used to pay overhead, reinvest in the business or make shareholder distributions. When a force such as COVID-19 effectively shutters the market, dramatically reducing income, the business must in turn reduce its short-term liabilities to maintain profitability. There are three effective ways to accomplish this goal:

Reduce, defer or eliminate shareholder distributions. When a family business is facing a crisis, the business must be managed in crisis mode. Ownership must remember that its first obligation is to the ensure that the business survives. Whether the reduction, deferral or elimination of shareholder distributions proves most appropriate, there will inevitably be difficult conversations with family members, some of whom may not be part of the business but rely on the distributions for their livelihood. Though awkward, those discussions are necessary. Shareholder distributions are the easiest short-term liabilities to reduce. And lenders tend not to be willing to renegotiate loan agreements if the business is still distributing cash to its shareholders.

Manage existing debt. One common way to put a Band-Aid on a more general problem is to renegotiate, stretch or stop paying liabilities as they come due. For secured lenders (e.g., banks), renegotiation of existing debt is an exhaustive process and generally requires professional assistance. For trade creditors and landlords, however, the business should assess who requires immediate payment and whose payments can be deferred while the situation stabilizes. This is not a long-term solution and, if debts remain unpaid for a considerable amount of time, a bankruptcy filing becomes more likely.

Reduce workforce expenses. Coronavirus threatens to impact the global economy for several quarters — with complete shutdowns of certain markets for multiple months. Absent meaningful income, payroll cuts might prove necessary. This can occur by reducing salaries, eliminating non-essential positions or furloughing entire shifts or departments with the hope of rehiring these individuals once operations resume. Prior to a layoff, management should seek the advice of counsel to avoid incurring unnecessary liabilities, such as those triggered under the WARN Act. Unfortunately, the most fruitful way to reduce payroll is to adjust above-market compensation for family members or to cut the positions of relatives whose roles are not essential to run a scaled-back operation. Termination (or temporary layoff) of a family member, while challenging, is preferable to cutting an employee whose skills are needed to maintain operations.

Although a sudden reduction of liabilities can prove daunting, a decade of strong economic conditions has led to more lax internal fiscal policies for many businesses. Management should undertake a comprehensive overview of finances to determine how best to manage liabilities going forward — such as revisiting financial arrangements with family members. In the years to come, a family business that emerges from this episode might find itself far leaner and more profitable as a result of cost-cutting measures taken today.

Policing credit risk
The best way a family business can protect itself from a customer’s financial distress (and a potential bankruptcy filing) is largely common sense — collect as much money as you can, as soon as you can. The following are options (ranked in order of preference) to protect your business from a potential credit issue:

Payment or cash in advance. In an ideal world, businesses would receive payment in advance of providing goods or services or otherwise incurring any out-of-pocket expenses. While often an unlikely option, this ensures against a credit issue should a client file for bankruptcy or otherwise wind down.

Collect on delivery. Collect on delivery, a form of advance payment where the delivery of product is not consummated until payment is received, dramatically limits credit risk by ensuring there is no lag time between providing the product or service and receiving payment.

Credit insurance or third-party guaranty. Credit insurance is another way to protect against bad debt. It can be expensive, but an insurer might be inclined to offer credit insurance on a broad array of accounts for a discounted premium. Alternatively, if the customer is not the end user of a good (e.g., if it is a distributor), a third-party guaranty from the end user might prove viable.

Payment in terms. Term payments carry the greatest potential risk for family businesses because customers could file for bankruptcy after the goods or services have been provided but before payment has been made. Should a customer file for bankruptcy or otherwise wind down its operations, the business could receive little to no money on account of the outstanding receivable. If terms are necessary, the business should insist on relatively stringent terms (the quicker the remittance, the better). The business should also be more diligent in watching for red flags, such as missed or late payments, bad news in public filings or any word on the street that would suggest the business should halt its dealings with its client.

Existing and new lending options
COVID-19 has had (and will continue to have) widespread implications for the lending industry.

For existing loans, one of the consequences of an economic meltdown is that lenders are not fiscally able to default all deficiencies in their portfolios without putting themselves at risk. Both lenders and their borrowers are facing the coronavirus crisis together. The phrase “amend and extend” is often used to reflect the lending policies during the Great Recession in which lenders entered into forbearance agreements with their borrowers and extended the loan terms. It is expected that lenders will adopt similar policies with their existing borrowers this time around.

In addition, family businesses can look to alternative sources of capital during the crisis. For example, the Small Business Association (SBA) has several programs designed to help businesses weather COVID-19. The SBA’s Economic Injury Disaster Loan Program and its Express Bridge Loans can help businesses during this downturn. The Economic Injury Disaster Loan Program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to help small businesses overcome the temporary loss of revenue they are experiencing. The SBA’s Express Bridge Loan Pilot Program allows small businesses that currently have a business relationship with an SBA Express Lender to access up to $25,000 with less paperwork.

Unlike the Great Recession of 2008-09, banks’ balance sheets are strong and capital is available. The family should determine their cash needs by creating a 13-week cash flow analysis. Once this is complete, and if cash is needed beyond what is generated from operations, they should contact their lender(s) and/or take advantage of the aforementioned government programs.

Reorganization, sale or winddown
Whether a lender’s knocks on the door have grown louder and more persistent or lawsuits from unpaid vendors have started to mount, few moments are sadder than the realization that reorganization, sale or winddown of a family business is inevitable. In times of crises, such as the one presented by COVID-19, the hard answer is often the only answer.

From an emotional perspective, it is important to understand two important points: (1) it’s not your fault; and (2) a liquidity event is not necessarily the end of the road. Many business owners facing such daunting decisions seek the counsel of a mental health professional who can help alleviate some of the emotional burden.

The following are several commonly available logistical options to help address an untenable fiscal situation:

Out-of-court workout. Given the breadth and impact coronavirus will have on the economy, it is likely that lenders will prove more willing to negotiate out-of-court workouts of existing debts than they had been in past years when their loan portfolios were much stronger. The restructuring of debt can provide a company with breathing room and potentially free up additional capital. However, it is important that in negotiating a new or revised agreement, the business does not offer improper concessions like excessive monthly payments or significant personal guaranties. If personal guaranties are deemed necessary, the business should consider allocating potential liability among shareholders.

Reorganization. Reorganization is generally accomplished through bankruptcy. The filing of a bankruptcy petition immediately ceases all out-of-court collection activity and provides the company with the freedom either to address a trade creditor problem — one in which the company cannot pay its outstanding receivables in a timely fashion — or to renegotiate the terms of a considerable liability (e.g., loan agreements or pension liabilities). Many companies of all sizes use bankruptcy successfully to reorganize their debt and emerge leaner and healthier. Additionally, a recent amendment to the Bankruptcy Code has made reorganization much more affordable for smaller businesses. There are downsides, such as the need to publicly disclose the company’s books and the potential that creditors might derail the process and force a sale. Transfers of the company’s assets to “insiders,” including family members, might be subject to clawback, and shareholders might ultimately be divested of their equity, depending on the case. But overall, reorganization is a powerful strategic tool when used correctly, and can save a family business from sale or winddown.

Sale. Whether accomplished in or out of court, the sale of a family business under circumstances such as these might prove necessary. In selling the company, the family can address certain intangible concerns, such as ensuring that the company’s name is in good hands. Additionally, employment for family members already involved in the business may be saved. If the sale is being undertaken at the behest of a secured lender, the family can extract concessions, such as the elimination of personal guaranties to motivate the family to cooperate in the marketing and sale process.

Winddown. For a family business, this is the least preferred option. If the decision to wind down has been driven by a secured lender, as with a sale, the family can seek to extract certain concessions, such as the elimination or reduction of personal guaranties. In circumstances such as those brought on by COVID-19, the family should work together to ensure that the winddown of the business doesn’t leave any family member destitute. Open dialogue in these situations is imperative so that once the winddown has been consummated, healing can begin and family relationships can remain intact.

During troubling times such as these, it’s important to remember what matters most — health, happiness and loved ones. By making hard decisions early, a family business can avoid harder ones down the line.                    

Michael Brandess is a partner at the law firm of Sugar Felsenthal Grais & Helsinger LLP ( Sheldon Stone is a partner at the financial advisory firm of Amherst Partners (

Copyright 2020 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact    

Helping you navigate through this crisis

As COVID-19 continues to spread around the world with devastating effects, first and foremost, we are focusing on the health, safety and wellbeing of our employees, families, customers and communities. As you know, we at MLR Media, the parent company of Family Business Magazine, are a family business, and we recognize the dual challenges of keeping both the business and the family functioning well. The former requires a focus on customers, constant employee communication and vigilant management of cash; the latter requires compassionate understanding of family needs, issues and requirements.

Like many family businesses, we’ve had to adapt — having our team work from home and implementing additional cybersecurity measures. Our team members are keeping in frequent contact, mostly through Zoom and Microsoft Teams video calls and meetings, something many of our readers are doing as well for both family and business meetings.

However, whether at the office or working remotely, our team remains committed to providing you with information, guidance and tools to help you navigate through this crisis. And to that end, we are taking a number of actions.
On our website, in our newsletters and in Family Business Magazine, we’re extensively covering family businesses’ responses to this unprecedented crisis and producing actionable content based on what family companies are doing.

Our May/June 2020 issue includes a section entitled “COVID-19 and the Bottom Line,” which presents advice on financial and legal strategies to help family businesses respond to the economic challenges exacerbated by the pandemic. Featured on our website is a section dedicated to the responses of our readers, as well as recommendations from family business experts. All the online articles in this section are free to view.

If you are willing to share what strategies your business or family is undertaking, please contact Family Business Magazine’s editor-in-chief, Barbara Spector, at A number of our readers have already submitted helpful information, including Paul Darley, third-generation CEO of W.S. Darley & Co., who has allowed us to publish his emails to team members, which put safety first and emphasized resilience. Paul’s emails have greatly aided many of our readers drafting their own company-wide communications. 

We’re also launching a complimentary virtual conference, Family Business Strategy Week, from June 15-19, which will feature once-a-day sessions focused on lessons learned during this pandemic, from risk management, to governance, to engaging the NextGen. We have also added more webinars to our schedule so you and your family members will have the opportunity to continue learning in a virtual environment. Please visit our website to register for Family Business Strategy Week or any of our webinars.

Most importantly, we — like you — are maintaining a rational perspective. We know that this crisis will pass, and that we’ll be resilient and resolute in our mutual recovery. We remain very grateful for your support and committed to helping you through this crisis and beyond.