Family businesses had an especially hard time coping with the situation brought about by the virus. The very nature of these businesses means that they normally suffer more when the local and international economy is going through a bad patch or a recession.
The fact that family businesses are established on family relationships often further ensures resilience and prosperity because the livelihood of the family often depends on the success and survival of the business itself.
Before the Government intervened with a number of positive fiscal incentives and support measures, many small businesses that rely heavily on cashflow considered laying off workers due to loss of income.
Family businesses have experienced a harder time dealing with such situations and making the decisions that, to some, may seem to be the obvious solution. As most family businesses are made up of family members ,whether to lay off some of the family member employees must have been the most difficult questions family businesses had to deal with.
Timely Government intervention through support measures directed towards these businesses provided them with the necessary liquidity to retain their work force, which in itself led to the mitigation of the negative impact the Covid-19 has had on the local economy and the welfare of these families. As a result, family businesses in Malta managed to retain most of their employees and is certain that, as things improve in the coming months, there will be an increase in demand for workers.
Some Family businesses have had to modify operations to make ends meet. Changes were made to business models so that, when faced again with similar unpredictable situations, such businesses would be able to adapt with an increased level of agility.
Indeed, to help businesses broaden their perspective, the Family Business Office, has been liaising with the European Family Businesses (EFB), an entity which brings together family business offices, organisations, and institutes from 15 European member states including Malta, in order to develop a system of mutual cooperation, consultation and the sharing of ideas and best practices, thereby putting each member in a better position to assist the local family business community.
Following such discussions with the EFB on a weekly basis , together we have created a number of papers that were presented to the European Commission, providing a basis for policy and launching incentives that would help sustain European family businesses and the economy they contribute immensely towards.
In addition, member states were able to build strategies and launch campaigns which have gone far in providing family businesses with the support required in such a difficult time, while also ensuring they, too, have a voice in the policy making process of the European Union.
What emerged from these meetings was that the same challenges were being experienced in each country represented at the EFB meetings, and it was, therefore, decided to prepare a paper highlighting the efforts of many family businesses that managed to adapt their business in such a way that they would be able to assist the community and also develop new revenue streams.
Based on this work, the Family Business Office developed the One Nation-One Family campaign to provide motivation and support for family businesses, as well as to highlight success stories in order to encourage other businesses to also explore their potential, despite the negative situation, transforming it into a learning experience.
Looking ahead, as the country now inches its way back to normality, it is crucial for family businesses to ensure a high level of responsible ownership and establish a long-term outlook for their business.
Moreover, with most family businesses having acted responsibly throughout the crisis, one had the opportunity to notice the societal value of businesses, specifically through employment and the purpose they give to people.
Without businesses, governments and society are unable to function. Companies are the main protagonists in the management and mobilisation of resources. Without them, economic activity disappears, and people are unable to work, shop or travel. The greater the economic activity, the greater the productivity, the greater the employment and the higher levels of per capita income and life.
The crisis has highlighted the importance of some often-undervalued sectors, namely retail and tourism. This awareness has helped businesses work towards an increase in public satisfaction.
Also, family businesses must use the lessons learnt to prepare themselves for similar situations in the future because it is a matter of when, not if, the next crisis hits. Due to their long-term planning, family businesses tend to have a resilient nature, which also depends on strong balance sheets and stability.
Through the aims of their long-term survival and planning, family businesses can help governments plan for the long-term and also for future crisis. Crisis resilient companies can help co-create crisis resilient economies for the Government.
Retaining the Business Transfer Incentive launched by the Government in 2017 -which has been now extended to the end of 2021 – is now more necessary than ever. Planning for succession and the intra-family transfer of business process are the most important aspects of a family business. The long-term ownership of family businesses is required to build up the trust and values on which the future growth of economies can be based.
Along these lines, increased taxation in the succession process is a constant threat with which some family businesses are faced. It is also for this reason that the Business Transfer Incentive needs to be kept in place. Without it, many business owners would be faced with the moral dilemma of either going for growth and providing employment – but leaving a larger tax charge for the next generation – or deliberately keeping their business smaller to avoid leaving behind a tax burden.
In this regard, businesses themselves are required to develop structures and strategies ensuring they build stronger foundations to remain resilient through thick and thin. The Family Business Office is there to help, and the incentives it offers to registered members are aimed at strengthening them financially, structurally, and culturally. Thus, in the forthcoming weeks, the FBO will be launching new incentives to build upon the successful ones already in place, thus aiming at further providing for the needs of family businesses, – the backbone of the economy.