Multigenerational Family Businesses Survive Economic Disruption

Crain’s Cleveland Business, April 19, 2020 

Richard Seaman

As we face economic challenges thrust upon us by the COVID-19 pandemic, businesses could learn a lot from multigenerational family businesses that are prepared to withstand this current economic disruption.

In my 70-year-old family business, we endured the oil crisis of the 1970s, monetary challenges of 18% interest rates, the 9/11 terrorist attack, and the 2008 financial crisis. Coming through these times and continuing to thrive keeps shareholders confident that both our economy and our companies can withstand economic challenges.

Multigenerational family businesses, by nature, develop long-term strategies. Decisions are made for what is in the best long-term interests of customers and employees rather than the next quarterly or annual earnings report. Multigenerational family businesses recognize the important role employees play in sustaining the business and often consider employees’ long-term welfare before profits.

Family businesses are generally pillars in their communities. Owners and leaders are involved in the community economically, philanthropically, and politically.

Family businesses are often strategically conservative, particularly when it comes to debt. As a result, most have balance sheets that can withstand sustained economic disruption. Thus, leaders of family businesses don’t rush to Washington, D.C., demanding a bailout. They are not beholden to the financial interests of venture capital or private equity, wondering where the next cash influx will come from.

In 2012, my wife, Judy, and I attended the International Family Business Network Summit in London. Europe was still reeling from the 2008 financial crisis, in continued financial disarray, driven by concerns about the euro and the sustainability of the European Union.

Much to my surprise, there was no discussion at the conference about ongoing economic disruption. Why? Because centuries-old, multigenerational businesses have survived many crises: two world wars and a global economic depression in the last century alone. For them, the 2008 financial crisis was simply a speed bump. They were prepared to respond with little concern about survival.

The history and culture of innovation implicit in multigenerational family businesses inform how they respond to a crisis. Having thrived through several generations, these businesses are used to constantly adjusting to a changing economic landscape, always aware of market disruptions.

As an example, at the London summit, I met a woman whose family business was 300 years old. Her company started as a blacksmith shop — and today is England’s largest iron forger. To diversify family holdings, the family recently invested in shopping malls in South Africa. Family-owned businesses are nimble and responsive to new opportunities. Such will be the case in this economic disruption.

We are already seeing incredible changes to business processes. Restaurants are learning how to promote and grow takeout services with the help of food delivery technology platforms like GrubHub, DoorDash, and UberEats. Academia is learning new ways of delivering content to students beyond the classroom (long overdue, particularly in higher education). Businesses are better understanding the efficiency and effectiveness of virtual meetings utilizing teleconference platforms such as Skype, Zoom, and GoToMeeting.

When this pandemic resolves, it will not be “business as usual.” Consumers will maintain new ways to procure products and services. Businesses will maintain new ways to manage and conduct commerce, increasing efficiencies and customer satisfaction.

As business owners and leaders are “sequestered” in self-quarantine, we must think not only about how to navigate the challenges of the next several weeks or months but begin thinking creatively about how this experience can positively impact our business models going forward.