Like all businesses in the world, family businesses were caught unprepared for the global health crisis due to the Covid-19 outbreak. One year after the crisis, family businesses use their flexibility, agility and ability to adapt to challenges, leaving Covid-19 behind. According to KPMG research, family businesses have taught the world a lesson in resilience in a global crisis of this magnitude.
KPMG research examining the effects of the pandemic on family businesses; It was carried out with 2,493 family companies and 517 businesses in 75 countries in the Americas, Europe, Middle East, Africa and Asia Pacific regions. In the research, it was discussed how businesses faced the pandemic, how they managed uncertainty, what they did to adapt to the situation, protect themselves and even grow their
KP Law Co-Founder Atty. Onur Küçük evaluated the research. Referring to the current structure and crisis management of family businesses, which are seen as the locomotive in the global economic recovery, Küçük said:
“Sudden income declines due to the effect of the pandemic and the interrupted supply chain all over the world have led all companies to take quick actions for costs, whether family business or not. At this point, family companies differed from other companies with their “long-term perspective” and “definitions of success”. In these days when we are experiencing the most uncertain periods of commercial life, family companies have strengthened family unity in decision processes and managed to manage their relations with all their stakeholders from the perspective of reputation and long-term strategy. The slowdown in business has given family businesses a great advantage in terms of time management, with limited resource management. As we have observed, family businesses have evaluated this period by formulating strategies for how they can move their business forward in the long run; Postponed actions, growth and transformation plans came to life in this process.”
Küçük said, “We think that the success factors of each group will shed light on all family companies in the research that groups family companies according to criteria such as the number of employees, the period of operation, decision mechanisms and ownership status. One of the most striking points of the research; family businesses are 42% more likely to implement transformation strategies than other companies. Many family businesses have had the opportunity to focus on streamlining their operations, digital transformation, property restructuring, succession planning.”
Some of the headlines from the report are:
– 42 percent of the respondents are first generation, 36 percent are second generation, 14 percent are third and 8 percent are fourth generation.
– In the period from 2020 to the beginning of 2021, 22 percent of family businesses maintained their income, while 69 percent lost income. 9 percent increased their income.
– There was a decrease of 8.56 percent in the workforce of family businesses and 10.24 percent in non-family businesses across the world. The lowest loss with 4.31 percent was recorded in Europe, and the highest loss with 20.07 percent was recorded in the Middle East and Africa regions.
– In this process, 76 percent of family businesses stated that they received state support. Of these, 21 percent benefited from government subsidies, 43 percent from financial support, and 36 percent from tax cuts and deferrals.
– 41 percent of family businesses preferred to reduce their costs, cut or postpone their investments.
– 36 percent reduced the number of employees, working hours or salaries.
– 14 percent restructured themselves, closed temporarily or permanently.
– 9 percent reduced executive salaries or rescheduled incentives and compensation.
– 17 percent of those whose incomes were affected by Covid-19 actually experienced an income increase. Predictably, this includes companies that are directly benefiting from the increased demand for their products and services.
– Most companies have adapted to change and have been able to rebuild their businesses to take advantage of new opportunities. Stamina and agility turned into advantages.
Traditional meets modern
– Many family businesses have realized that family needs to be more part of the business as a result of the unexpected effects the pandemic has brought on their companies. It was important for the family to re-enter the business. In order to ensure that the family’s purpose and values remain intact, older family members in particular returned to work and managed stakeholder relations.
– Younger generations are also involved in the business. With his technological knowledge, he guides the family in identifying digital solutions to transform the family’s business operations, discovering new markets and developing technological products and services suitable for these markets.