2021: Recovery and Respite for Family Enterprises?
Actions and initiatives for entrepreneurial families as they navigate the pandemic economy
Few business leaders will look back warmly on 2020. Rightly so, it was disastrous. While there’s little certainly that 2021 will shape up as our annus mirabilis, family enterprises are quietly recalibrating their futures.
Resolute in their decisions to carry on, many are updating disaster recovery plans with vigour. Others are engaging next gens with a view to earlier-than-planned successions. At the extreme end, some are looking to exit their businesses altogether.
It is rarely sensible to introduce a new captain in a bad storm, points out University of Ottawa’s Peter Jaskiewicz1, advising families to stay calm and keep working. “It is only after the crisis that you should exit a well-positioned business or introduce the next generation when the waters are calmer.”
The question is how many businesses are well positioned? Canada’s economy is set to contract by 5.7% in 2020. Deloitte predicts vaccine roll outs will propel a 4.9% rebound in 2021. Calm waters seem closer, yet family enterprises are looking to the new year with cautious optimism, says Sirius Financial Services’ Susan St. Amand2. “If survival was the priority for 2020, sustainable recovery is the theme for 2021.”
The pace of which, the Conference Board of Canada warns, could flatten with regionalized shutdowns akin to what is now happening in Ontario, which accounts for 38.6% of Canada’s GDP, and in Quebec. Canada’s provinces are recovering from painful shutdowns in economic activity they suffered in the second quarter of 2020.
Recovery or Recession?
Despite Atlantic Canada’s success in containing the Covid-19 outbreak, and the region’s efforts to promote domestic tourism within the Maritime bubble, recovery will take a rather leisurely pace, the Conference Board predicts.
Quebec’s downturn, which hit construction and manufacturing especially hard, has been deeper than initially forecast. Neighbouring Ontario has not escaped recession, despite relatively robust performance in its finance and real estate sectors.
Sustainable recovery is the theme for 2021
Alberta’s economy, which has struggled since 2014’s oil price collapse, is expected to stage a solid rebound in 2021, albeit from deep lows. British Columbia, which has suffered from international travel restrictions, is seeing demand for its forestry products perk up. Consumer spending has held up too, and several megaprojects will bolster investment and construction activity into 2021.
There’s cause for optimism. Stateside, where Canadian businesses sent $358 billion worth of goods and services in 2019, family business expert Joe Astrachan3 advises caution. “Be careful in planning, the effects of government stimulus will have a long tail,” he warns. “There may be significant bankruptcies into the fourth quarter of 2021.”
Indeed, as unemployment benefits expired for millions of Americans on December 26, Donald Trump, who spent Christmas playing golf in Florida, has blocked a $900 billion pandemic relief bill that would extend them. Further delays won’t help on either side of the border.
Resolute and Resilient
Here at home, Canada’s enterprising families are mapping out plans to stay resilient. In terms of strategies, Jaskiewicz is seeing a shift towards preparing next gens in crisis prevention, beefed up cybersecurity and contingency plan implementation, among others.
There’s dual emphasis on long-term views and short-term immediacy, St. Amand says, pointing out that transfer of skills and ownership is top of mind as demographics remind families of their vulnerabilities. “Multigenerational continuity and resilience continue to be a focus with an increased sense of urgency.”
Will the “family” component of family business ownership take on greater significance in 2021? It’s not unlikely. Purpose-minded family leaders have leaned as heavily on their boards as their next gens to find safe passage through the recent crisis.
Enterprises responding nimbly to rough trading conditions have “been more successful in bringing new generational points of view to their businesses” to deal with issues and opportunities, says Jesus Casado4 of European Family Businesses. “Family enterprises have unique capabilities to react and adapt more quickly and successfully due to the nature of the family business model.”
As for larger businesses, executives are likely to rethink operations, strategy and other fundamentals to drive revenue and build resiliency in what could be more predictable markets. Much of 2020 has “felt like a limbo state,” says McGill University’s Robert Nason5, with 2021 looking less like a moving target.
“For families with multiple businesses, it is a chance to evaluate their whole portfolio – some industries have been devasted and others growing – so the pandemic has been a catalyst for reassessing strategy on the family level and reorganizing their entire constellation of activities,” Nason says.
What’s in store for family enterprises in 2021? Probably diligent preparation for more unknowns with more purpose and more family closer at hand. That’s not a bad thing.
Notes:
- Peter Jaskiewicz is Professor of Family Business and Entrepreneurship at University of Ottawa, Canada
- Susan St. Amand is Founder and President of Sirius Financial Services, Canada
- Joe Astrachan is Professor Emeritus and past Executive Director of the Cox Family Enterprise Center at the Coles College of Business, Kennesaw State University, USA
- Jesus Casado is Secretary General of European Family Businesses, Belgium
- Robert Nason is Associate Professor of Management at McGill University’s Desautels Faculty of Management, Canada