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.