In this issue
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.
Many economists believe the United States may already be in a recession, due to widespread business disruptions from the COVID-19 pandemic.
Unemployment claims spiked to 6.64 million during the week that ended March 28, the highest weekly number on record. While it was widely believed the economic expansion the country had enjoyed was overdue for a correction, the coronavirus accelerated the speed at which economic activity has nosedived.
Research over the past three decades suggests that family assemblies, family councils and other governance structures help a business-owning family sustain their enterprise over multiple generations. As families become aware of the value of governance activities, they wonder how other families set up their assemblies and councils, how much they spend on governance and how the various governing bodies operate.
Philip Clemens, retired chairman of the 125-year old Clemens Family Corporation pork-processing company in Hatfield, Pa., knows firsthand that a holding company structure can play a pivotal role in the life of a family enterprise.
Yet, Clemens observes, few family businesses consider this option. A holding company has a controlling interest in various subsidiaries and acts as a parent entity.
Many successful family businesses have a form of family office embedded in the company.
In the late 1980s, Charles A. Collat Sr. asked his four children if they knew what it meant to run a family business.
“Being young and naive, we said, ‘Absolutely, we know what it means to run a family business and to be effective owners,’ ” recalls Charlie Collat, 53, his son.
The children didn’t really know — but they wanted to learn. So the family engaged a family business consultant to help Charlie and his three sisters learn to become good owners of Mayer Electric Supply Company.
Whether you’re a newly minted tech billionaire in Silicon Valley or the owner of a family business in Asia experiencing exponential growth, you’re likely to face challenges in coming to terms with financial success.
As I write this — from home, since our team is now working remotely — the United States is in the midst of a public health crisis. The coronavirus has disrupted business operations, wreaking havoc on supply chains and even entire industries, such as restaurants.
Adding to the stress, on March 16 the Dow recorded its worst one-day point drop in history and its worst performance since Oct. 19, 1987.
This spring has been a time of challenge for most businesses. Multigenerational family businesses, however, have a leg up. They’ve endured rough times before, and have survived.
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.