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​Are Canadian family businesses really more resilient, agile and adaptable than other business types? If so, have they been able to tackle the challenges of COVID-19 better than most, and perhaps, emerge even stronger?

In the wake of the ongoing pandemic, KPMG Enterprise and the Successful Transgenerational Entrepreneurship Practices (STEP) Project Global Consortium have joined forces to answer these questions. Global survey data was collected between June and October 2020, and bolstered by additional input from business leaders, advisers and academics in early 2021. With nearly 2,500 responses from family businesses globally including 76 in Canada, the Global family business report: COVID-19 edition provides insight into how family businesses in Canada and across the world are mastering a comeback and triumphing over COVID-19.

COVID impact in Canada

In responding to the impact of COVID-19, many family members have played critical roles as owners of the business to safeguard their financial and emotional investment and to preserve the legacy that has been built over multiple generations.

Not surprisingly, family enterprises first saw the impact of the pandemic in their revenues. And while most experienced revenue declines, 17 percent of Canadian businesses experienced a revenue boost, a significant increase over the global average (9%).

How has the COVID-19 pandemic affected the revenues of your business?
How has the COVID-19 pandemic affected the revenues of your business?

Source: Step Project Global Consortium and KPMG Private Enterprise Global family business report: COVID-19 edition

The strategic response

The most significant revenue increases were reported in companies that benefited from the acceleration of technology. The need for faster and better communications technology for remote work environments and inter-personal communications led many family businesses to accelerate the digitalization of their business models, which fueled the growth of information technology developers and service providers.

Yannick Archambault, Partner and National Family Office Lead, KPMG Enterprise concurs, “The pandemic has highlighted how essential investments in digital technology have been – not just to simply survive but to be in a position to succeed going forward.” Mary Jo Fedy, National Leader, KPMG Enterprise adds, "Now more than ever, businesses need to be proactive and invest in digital and emerging technologies, whether to facilitate remote work or online sales, services and support."

In a similar strategic realm, COVID-19 has accelerated conversations within families on governance to enable faster decision-making and allow them to engage efficiently with their family members and shareholders. “Especially among smaller family businesses, where governance might have been seen as a tick-box approach in the past, there is now a better understanding of how good governance practices can help to reduce risks and protect the business and the family”, says Daniel Trimarchi, Director, Family Enterprise Advisory, KPMG in Canada.

From impact to action

The actions that family businesses have taken to respond to COVID-19 from a business, family and society level demonstrate that being able to act and adapt quickly gives them an extraordinary competitive advantage. In fact, 87 percent of family firms that participated in the survey are led by family CEOs, which reflects a high level of family involvement in the decision-making. From the survey results, as well as direct experiences with family businesses, there are several financial and non-financial actions that families have taken to stabilize their businesses during the initial shock caused by the pandemic.

The initial impact of COVID-19 on family businesses was primarily focused on overall cost-cutting measures. In Canada, the most prominent action was to reduce the companies’ employment expenses and take business actions, such as cutting office expenses (40 percent), renegotiating vendor contracts (15 percent) and deferring or reducing executive pay (10 percent). This supports the widely accepted view that under severe threats to their business, family businesses need to rebalance their economic and non-economic goals, putting greater focus on the economic priorities that will allow them to navigate successfully through an uncertain path ahead.

What actions are you taking in response to the impact on your business?

The most implemented actions per macro-category

Canada
What actions are you taking in response to the impact on your business? Source: Step Project Global Consortium and KPMG Private Enterprise Global family business report: COVID-19 edition

Source: Step Project Global Consortium and KPMG Private Enterprise Global family business report: COVID-19 edition

Lessons in resilience

These businesses have shown their resilience in making a comeback, even in the most challenging times. But even more than that, family businesses are demonstrating to the world that by leveraging all of their assets – financial and non-financial – they can lead their companies into the future and not look back.

Read the full Global report and Canadian benchmarking report to learn more:

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