The Family Business Office (FBO) has been monitoring statistics provided by foreign firms and institutions on the effect that the COVID-19 pandemic has had on family businesses. A survey carried out by Banyan Global on family businesses shows that 82 per cent had seen a negative impact on their business from the coronavirus outbreak and about half of those said the impact has been significant.
In Malta, the Family Business Office has had no family business de-registrations to date due to business closure since the COVID-19 pandemic hit our islands. This, in itself, is very encouraging and a sign that local family businesses are resilient and prepared to withstand the tests and obstacles faced during a crisis such as the Covid 19 pandemic.
Family businesses have had to make drastic changes to the way they were used to doing business. The nimbleness, agility and ability to adapt to the current market situations are elements that can put a business ahead of its competition.
Family businesses experience a certain pressure not to fail, also due to the reputation and legacy they would have established over the years and this makes them hardy and able to take tough decisions so they can adapt and survive. In fact, the Regulator explains, family businesses differ from other companies in that their form of ownership gives them the ability to take critical actions that could help them through difficult times such as the ones the country and the world are going through right now.
More than ever before, it is in times like these that one must think outside the box and look at ways of adapting so that one’s business would be able to survive and cope with the difficult times ahead.
Some businesses, have managed to take action on their own while others require the assistance or the support of others to help them adapt their business model in order to deal with the ever-changing circumstances and demands.
As a result of the various support measures, including the Investment Aid for COVID-19 Products and the Business Re-engineering Consultancy incentives administered by Malta Enterprise, together with the incentives offered to registered family businesses, local enterprises can get the help and guidance they require to make the right decisions for their business to adapt and survive.
A number of local companies have been proactive and adapted some lines of business with agility; for example a number of clothing companies have switched to the production of masks and other protective equipment, chemical manufacturing companies are producing sanitisers and hand sanitising products, taxi companies have switched to delivery services, and restaurants and retail outlets have introduced e-commerce sites to be able to maintain a minimum level of sales and keep their businesses and workforce going.
On the more creative side, printing companies switched to 3D printing and are making face shields. One such company, also managed to export its product during these difficult times, thus entering the export market.
The FBO has also had to adapt due COVID 19 as one of the main plans pre COVID was to focus more on reaching out to family businesses and business organisations, service providers and other constituted bodies to provide information on the role and function of the Family Business Office, the incentives it offers to family businesses and how it can be of support.
Presentations were made and one-to-one meetings were held in January and February 2020. A number of other conferences and seminars were being planned for the rest of the year. However, all those plans had to be changed due to the COVID-19 crisis and meetings had to be held online.
The pandemic has led us to explore further various means of communication which were already readily available, but which perhaps we hadn’t been using as frequently.
Another medium which the Family Business Office resorted to during 2020 to adhere to its plans to reach out to the public was the Television. Throughout 2020 the FBO collaborated with the TV programme, Wirt u Eredi , which aired on the national TV channel as from the end of , with a focus on sharing experiences of family businesses, as well as providing information on good practices, legacy issues and generational renewal.
Another area the FBO has been working on is the launch of new incentives which are being rolled out over 2021. By looking at what we have already been offering and the take-up on these incentives, the office has looked at ways of improving the incentives in place and creating new ones to cater for areas where family businesses require most support.
Given the importance of the internet and remote access to Government services, the FBO is also focusing a lot of energy on its website, which will be revamped throughout 2021. The plans in this regard are to help reduce bureaucracy and to give family enterprises, which are very busy with the day-to-day management of their business, better access to the office’s services through better interfacing.
The Budget for 2021 saw the renewal of the incentives being offered to support the transfer inter vivos of family businesses. These incentives, offered by the Ministry of Finance, have come a long way in promoting the family business succession planning and generational renewal. Thanks to the tax exemptions and incentives, the Government has helped reduce the obstacles faced by family businesses when it comes to making the tough decisions on how and when to pass the business to the next generation.
The FBO has also been working very closely with Malta Enterprise and other entities on the development of training incentives. Apart from the importance of receiving training in areas that will help the business grow further, we also need to train our family businesses to think outside the box and explore new revenue streams so they can spread their risk further and are better prepared for rainy days.
The family businesses are the backbone of the economy, it is, therefore, crucial that the authorities focus on the needs of family businesses and continue investing in them.