In the corona crisis, many family businesses have shown a high level of resilience.
(Photo: Hornbach)
How often have family businesses been laughed at. Too conservative, too careful, too sluggish, not optimized enough. Companies that achieve high profits with lean structures were often regarded as role models.
But the consequences of the global pandemic have changed the picture. Now it’s clear that family-run companies in particular can handle a crisis. Studies show that their performance is significantly better on average and that they usually recover much faster after slumps in their industry.
An important factor: Since the owners not only have their capital in the company, but also feel personally responsible, they often intervene quickly when difficult times appear and use the short decision-making paths to quickly adapt the company to the new situation.
But therein lies the good news for all other companies. You can learn a lot from family businesses – and you should.
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Because in these increasingly uncertain times, crisis resilience must become one of management’s top priorities.
Long-term thinking must be rewarded
This is most evident in the supply chains. Many corporations played their suppliers off against each other, negotiated down the conditions and kept reducing the number of suppliers. That helped the balance sheet in the short term, but during the crisis they were usually the first whose supply chain broke. Because they could not expect preferential treatment from their gagged suppliers. And if one fails completely, there is often no alternative.
Family businesses, on the other hand, often maintain very partnership-based and long-term relationships with their business partners and sometimes help them through difficult times. They often get paid back in the current supply crisis.
This long-term orientation of the family business is also evident in other areas. On average, they have a higher level of equity, which allows them to hold out longer in lean times. It also makes it easier for them to access vital liquidity.
But there is no law of nature according to which long-term thinking and partnership-based behavior are only possible in family-run companies. It takes courage for salaried managers to break out of quarterly thinking and the fixation on short-term success.
This requires a corporate culture and incentive systems that reward such behavior. But there is a good argument that can be used to convince shareholders: It pays off – also on the stock market.
More: Why family businesses often perform better on the stock exchange