Family business after COVID-19, more people, less money, new opportunities, what should we do?
Don't let the "crisis of the century" pass with only pain. Turn this rare opportunity into a “wonderful blessing” that brings us closer to the people we love. Give us the opportunity to fine-tune our business more neatly. Organize your family better so it's ready for the day the sky opens. For the world after Covid that will not be the same. There's probably only determination. Never give up on remaining the same and not changing.
Today, the haze of the coronavirus outbreak continues to blanket the world. forward thinking people Leaders in various sectors Start asking questions about what will happen next. What will be the economic, social, political impacts, including people's lives after this? And if we gradually Zooming down to the subunits of society such as families, family businesses, or even ourselves. What will change after this? And is there anything that we "need" to change in order to survive after this? This is today's important question.
4 factors determining the future
Factor 1: Recession lies ahead. “We are entering a period where economic activity will decline significantly over the next several years,” Gates told the Financial Times. Even though the Bill & Melinda Gates Foundation has more than $40,000 billion in funding, United States[1]Will spend everything to produce a COVID vaccine. Bill Gates still predicts the fastest is 12 months. After this, more than 78 vaccine research teams around the world are doing the same thing. But the time frame is still in the next 12-18 months.
In addition, news of more than 30 mutations of the coronavirus has emerged, and no one has been able to confirm that any patients have recovered from COVID-19. Won't come back again. (Some scientists say that It will come back every year!) Declining economic activity business shutdown higher unemployment Debt that must be paid and other economic problems That will follow is like a tsunami that is forming in the sea, waiting for the time to come crashing in.
Factor 2: Technological Disruption At an accelerating rate, the trend of Technological Disruption has not stopped following the government's lockdown. But it has moved forward at an alarming "acceleration" in online sales channels. digital marketing or telework It's not an option anymore. But it is the main road that every business must jump on. Situation under the COVID-19 outbreak It has become an important factor causing Digital Transformation. faster than ever before and leads to Factor 3: New set of behaviors and thoughts of consumers after COVID. Starting with Social Distancing measures and people's adjustments in times of crisis. The new “behaviors” that we are gradually seeing, such as ordering food delivery through an app or using mobile banking, are now not just the new generation. But people of all generations turn to use it widely. or the hygiene behavior that has gone one step further for people around the world, etc.
Another thing that is changing But what we may not yet clearly see is a new "mindset" such as prioritizing life. Giving value to things of people, which will affect their way of living, consuming, saving, and investing in the next period, etc., a new set of behaviors and mindsets These aspects of consumers will be a big problem for every business after COVID-19.
Factor 4: Rebalancing the supply chain Entrepreneurs in the next phase will be in a mode where they must adjust the balance between Sufficiency and Efficiency to respond to the new environment where trade obstacles arise. and transportation has increased In the post-COVID world, the risk profile of international transactions increases. is an important variable that entrepreneurs must weigh. Between a production plan that has the lowest cost (Efficiency) by relying on foreign manufacturers and one large supplier or choosing a production plan that has a shorter supply chain, is more local, and spreads suppliers out to many places. Which, although it increases costs, reduces the risk if an event like COVID occurs again.
In addition, under the pressure of the economic situation after this, it will force many countries to adjust to "survival" mode, which may lead to the use of even more trade protectionist measures. Providing higher subsidies to businesses and industries within each country will cause advantages and disadvantages between domestic and foreign producers. International trade may not be as free as it used to be.
4 factors determining the future: economic recession, technological disruption at an accelerating rate, new behavior and mindset of consumers, rebalancing of the supply chain.
changes that are taking place
The above four factors will lead to adaptive survival of any organization. including family businesses big changes Things that we will see more and more clearly include:
- Business adjustment into “Survive Mode” This will lead to reducing expenses, reducing costs, reducing capital to maintain cash flow. and accumulated funds to get through the crisis period. In addition, there will be changes to new Best Practices under the New Normal during a time like this. Businesses that accept government work will continue to move forward.
because 2. The public sector will become "Big customer" (Big Government) of many businesses, whether for reasons of stimulating the economy or want to increase employment for people in the country Some new graduates will increasingly turn to work in the government sector. Most government investment projects will continue in order to breathe life into the economy as a whole, including tourism. and exports were severely affected.
The next change concerns the international trade and service sectors. 3. Changes in new trade regulations This will have different positive and negative effects on businesses. For example, businesses related to agriculture, food, medicine, medical supplies, or industries and services that are considered “essential” (Essential industries) will be well protected and taken care of by the government because they are considered industries for national security Subsidies and investments will flow in.
Meanwhile, industries including services that are considered "non-essential" (Non-essential industries) such as the entertainment, beauty, jewelry, etc. industries will be even more difficult to survive under various New Normals that are gradually revealing themselves.
We will see a change in order. 4. Physical appearance of the Business Model New, new businesses as a result of access to new technology, market downturn, and epidemic situation will create new forms of demand and supply (such as Hospitel or ZOOM being clear examples), changing consumer behavior Or even a rebalancing of the Supply Chain will create new business opportunities. For entrepreneurs who can quickly adapt and seize the opportunity.
Three challenges of family businesses
All of the above changes will lead to three challenges for family businesses:
1) There are more members in the family business. The labor market doesn't look bright. (which food delivery employees may not agree with me because their jobs are booming) narrowing job opportunities for successors and family members Imagine an heir to a pilot, freelancer, or coffee shop owner. You may have to come back and help with the business at home more because of forced circumstances including children and grandchildren who have just graduated. Relatives who recently lost their job, etc.
2) But the family business has less money. declining economy People use it carefully. Reduced investment will result in lower income and profits for most businesses. In such a situation, the question is, how to allocate less money for “family” and “business”? Will use the cartel's money to save the business. Or should we save for emergencies for the family? It becomes a challenging question.
3) There are new business opportunities. In a crisis, there is always an opportunity. The problem is that family members may see different opportunities. For example, the new generation of heirs may see an opportunity in online business. While adults see beautiful plots of land being sold off Or will you just keep the money? Because you don't know what will happen in the future? How will they decide to use the cartel's money?
All three situations above will cause tension in a family business. and may lead to conflicts in various dimensions, such as conflicts between members who have different personalities (Clash of personalities) but now we have to work together. Conflict in the matter Allocation of benefits Between family members (Clash of interests), where is the line between personal interests and public interests, etc.
Controversy over business idea (Clash of business principles) whether it be guidelines for using money during a crisis Will you invest or will you save? The philosophical idea that between business and family, which comes first? Or a strategic question that will be a fierce battleground between different generations about whether family businesses should adapt to “Survive Mode” (must survive first, other things come later) or “Change Mode” (must change at all. Otherwise, you won't survive!) for sure.
Finally, the conflict values, beliefs(Clash of values) will be another battleground where there will be clashes between family members. Whether it is the new generation of heirs or the old adults. or between family members and new outsiders such as in-laws, daughters-in-law, etc. Conflicts that will lead to clashes among family members are not difficult to predict when people flow back into the family business in an economic situation that Strangulate and conditions that force everyone to find a way to survive
Three challenges and conflicts among family members
Recommendations for family businesses
At this point, some family businesses may not continue or in some cases they “choose” not to continue. Therefore, this article is about new business ideas in times of crisis. Techniques for how to recover or an encouraging article like “If you fall, you can get up” might be more interesting. But what if your family business still survives? Or choose not to give up. I have 4 suggestions that families should take quickly before problems explode.
Advice #1
Define duties and rights of new family members. (Redefine responsibilities and rights) – Times of crisis are a good opportunity for leaders to raise the issue of responsibilities and rights. and rights of members to discuss Because we need everyone's strength to help family businesses get through this challenging time. And I suggest that we talk about "duties" before talking about "rights" because duties come with effort and sacrifice. But rights come with comfort and benefits.
If talking about previous duties Talking about rights will be easier. (Because we have seen who has what duties and what to do) In addition, no matter what duties and rights used to be before COVID, we can review them again. The COVID situation gives us that opportunity. Let's work together to design what will happen from now on. What should it be?
Advice #2
Create an effective collaborative decision-making system. (Lay down an efficient decision making mechanism) – Decision making in the family business will be very challenging after this. because more people Opinions became more diverse. But less money means a narrower margin for error. This situation brings stress to the family. Collaborative decision-making like a committee with many members. People come together to think. Having clear voting rules will help reduce conflicts. And it's a more deliberate decision.
The family should therefore have a joint decision-making system in place. The first thing that the family should do is to have “Rules of the meeting” After that, various issues began to be discussed. Let's discuss together, starting with simple issues such as how often will we meet? Who will be involved in decision making? How many directors should we have? Will outsiders be involved in decision making? etc. After that, the family is ready for something serious. that must be decided together
Advice #3
Arrange the cartel's money clearly. (Designfamily Wealth) – When money is little and the future is highly uncertain. Allocating the family's wealth must therefore be done carefully. What the family should do is divide various assets. Coming out into parts clearly, such as what is personal property (such as the property of parents, each sibling) and what is common property of the family? (regardless of whose name it is in) and what are the assets of the business, etc.
Division of property into parts Clearly like this will make further management easier. For example, if assets must be transferred between these 3 groups (personal, family, and business), how will the decision be made? What is "can do" and what is "don't do"? For example, can family money be shifted to a business? Can I invest my family's savings? Or if what to do is a rule? What is the ceiling? etc.
Family businesses that already have a holding company are a little easier because they are considered to be already organized to some degree. The concept is to be clear about how much property you have. Where are you? And what are the rules for using those funds?
Advice #4
Seize the opportunity to instill good values in the family. (Be a role model) – There is no doubt that this crisis will eventually pass. But there are some things that will remain in my memory long after this. That is how members behave during these difficult times. My experience as a consultant has been that many families often have ideas. to pass on the values that they believe are good to the next generation
But believe it or not, values are best conveyed when leaders demonstrate them. Take for example If you want family members to sacrifice Leaders must start first. I'm willing to sacrifice first. In times like these, we have countless opportunities to make sacrifices. love together We must stop fighting with our brothers and start talking to them in a good way. Or if we want our heirs to see the value of saving and not spending more than we have. ...You probably don't have to teach this one. Because the crisis will be the one who teaches it.
4 tips for family businesses after COVID-19
Don't let the crisis that some media call it... The “crisis of the century” passed with only pain. Turn this extremely rare opportunity into a “wonderful blessing” that brings us closer to the people we love (just keep social distancing during this period) and gives us the opportunity to fine-tune our business. climb Organize your family better so it's ready for the day the sky opens. For the world after Covid that will not be the same. There's probably only determination. Never give up on remaining the same and not changing.
References
- Ruchir Punjabi, “How Your Business Can Survive The COVID-19 Crisis (And Then Thrive After It),” entrepreneur.com, April 2020.
- Hamza Mudassir, “COVID-19 Will Fuel the Next Wave of Innovation,” entrepreneur.com, April 2020.
- Brent McKnight and Martina Linnenluecke, “Businesses step up to make the products we need to get through the coronavirus pandemic,” theconversation.com, April 2020
