Family businesses may be best equipped to ride out recession, Barclays Wealth report says - bizjournals:

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With difficult economic times Doyle would be willing to give up her salar again to keep thecompany afloat. “We would do withoutt the pay, as opposedc to laying people off,” said Doyle, who founderd Compassionate Care HomeHelpers Inc., a non-medicak in-home service provider, with the help of her sister and Other U.S. family businesses may make the sametoughg decisions. According to a Barclaysx Wealth report earlierthis year, this factoer and others may mean family businesseds are particularly well-positioned to ride out the Specifically, the report points to several key characteristics that many familh businesses share, such as a long-tern outlook, tendency toward risk aversion, low debt load and management agility.
“Ifg you look at the sacrifices that can be made in the shory term in regard towagexs … they may be able to take a little bit less in said Ray Vargo, director of the Small Business Developmentg Center at the University of Pittsburgh’s Institute for Entrepreneurial Excellence. Diane Sandstrom, consulting managed with Duquesne University’s Smalkl Business Development Center, said abougt 25 percent to 30 percent of small businesses in the region fall intothe family-owned category. “Sometimes, the family owne businesses are not in such adire position,” Sandstrom said.
“Theyu will fund an expansion using swear equity instead of going into Sweat equity could simply mean agreeing to work longet hours for a certaihn period of time to see the family businesw through arough spot, she The decision-making process in a family owned business also may be more efficien t than other types of companies, Sandstrom said. “Theu can make a change much quicker,” she said. Family-owned businessea also will sometimes not take on a big burden of debt becaused they want to pass thebusiness down, Sandstrom said. Doyle’ws experience with Compassionate Careis instructive.
The company, whicnh is only now close to could not afford to pay its officestaftf — Doyle, her sister and their mother for the first two years of its so the three went without a salary. “If we didn’tf do that, we wouldn’t still be here today,” Doyld said. “None of us got paid to do any of Doyle said communication is extremely easy betweemn motherand daughters, and they can reachu each other after business hours to make a decision. “Wew don’t have to wait until Monday at9 a.m. to make a Doyle said.
The trio is willing to agaimn gowithout salary, although Doyled doesn’t expect the downturn to so thoroughly impacrt the company to make that necessary. “We still will do that if need be,” she said. One danger for family-ownexd firms, however, is because much of their debt may bepersonally guaranteed, when a business it could be financially devastating for the Vargo said. “I’ve seen some situations where familh members have gone out to borrow everything theycoulx — they think it is going to turn around,” he said. “Whej a person is signing their name onthe line, it’s personal debt.
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