Family Businesses & Difficult Market Conditions
In turbulent market conditions, family businesses – like every other company – must look at their own organisation and consider whether they are best prepared to survive more uncertain circumstances. They must look at their operations, their costs, their market offering, and investigate whether they are still fit for purpose in a changed marketplace. At the same time, such businesses possess a range of potentially inherent factors that can count both positively and negatively against their capacity to survive.
In choppy economic waters, a company that can afford to take a long-view will often be better placed to survive. Family businesses are often established and run with a view to providing consistently for future generations of the family, and so make decisions based as much on future survival as they do on short-term market gain.
The counter to this longevity is that family businesses might be prone to being slower to respond to market needs. Some companies may believe stoically in ‘the way it’s always been done’ and consequently fail to adjust sufficiently to a marketplace that is demanding different things. This might be, for example, as the pace of technology overtakes their products, or the presence of competitors eats into their market share.
Family businesses often build loyal customers through their consistency and long-term presence in a market. When cash is scarce, this trust can be the difference between sales and despair, and can help keep business buoyant when even multinational competitors are struggling. Such trust can also extend to supply lines, with suppliers happier to maintain prices and supplies because of the personal and business relationships they have established.
Some family businesses can be subject to complex decision making processes and governance arrangements, making it a complicated and lengthy process when trying to change direction to meet new consumer demand. The result might be difficulty in, for example, entering new markets, or in taking the decision to adopt a new business strategy.
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