How family businesses can stay resilient during the COVID-19 crisis

Hosted by Courtney Vien

Jonathan Flack, CPA, the U.S. family business services leader at PwC, discusses the struggles family businesses are facing during the current economic crisis, as well as the unique strengths that can help them weather hard times such as these. He also shares advice for clients who are family business leaders, especially around communicating with staff and stakeholders.

What you’ll learn in this episode:

  • How family businesses are faring during the current economic crisis.
  • How these businesses can improve liquidity during the economic downturn.
  • Advice for family business leaders having hard discussions with stakeholders.
  • The strengths of family businesses that can help them endure in this crisis.
  • What role continuity planning can play in crises of this nature.

Play the episode below or read the edited transcript:

For more news and reporting on the coronavirus and how CPAs can handle challenges related to the pandemic, visit the
JofA’s coronavirus resources page and PwC’s COVID-19 page.

To comment on this podcast or to suggest an idea for another podcast, contact Courtney Vien, a JofA senior editor, at


Courtney Vien: Hello and welcome to the Journal of Accountancy podcast. I'm Courtney Vien, a senior editor with the Journal of Accountancy. I'm speaking with Jonathan Flack, the U.S. family business leader at PWC. He'll be talking to us about how family businesses are faring during the economic crisis.

Hello, Jon. Jon, what are you seeing from your family business clients during the current economic upheaval?

Jonathan Flack: As you can imagine with a lot of family businesses — you know family businesses are across a lot of different sectors and what we're seeing is a lot of those sectors are being significantly impacted by the crisis. Sectors like food manufacturing and retail chains that are selling food, etc., are doing OK, that are even thriving in the in the environment, but the vast majority of the family businesses that we work with and that we see are having a significant impact from the economic crisis. 

Vien: What are some of their main concerns right now?

Flack: Some of their main concerns are first for their employees. Most family businesses are long known for having strong cultures and very long-term and tenured employees in their businesses and so their very first focus here is taking care of those employees. In order to take care of those employees, their second concern is around liquidity. Many have seen at least a softening, if not maybe even a dramatic reduction, in their revenue and this has put a significant strain on cash reserves as well as liquidity for the business.

Vien: What kind of recommendations are you making to clients to help them maintain liquidity?

Flack: So preserving and raising cash is most critical to weather this crisis, so taking full advantage of all three of the stimulus bills that have been passed by Congress is the main thing that we're recommending to each of our clients. There are several features of the bills, of the three stimulus bills, that can be very helpful to clients in improving their cash flow. The first is the payroll tax credit. There's also NOL [net operating loss] carrybacks for any losses that they had to take, back up to five years. There's a delay in payment of various different employment payroll taxes as well as loans, loan guarantees, and other specific loans for small businesses. Many family businesses are in the small business category. These measures will help family businesses retain as many employees as they can because it's going to help provide that liquidity that we spoke about before.

We also encourage family businesses to stay connected to their employees. One of the things that this crisis, through the recommendations of all the experts, is to have us all physically distance in order to try to prevent the spread of the disease while we're used to as businesses — and family businesses are no exception — to interacting with each other. And so we're encouraging our family businesses also to keep morale and keep their culture strong in anticipation of trying to return to business as normal once the crisis begins to subside. 

Vien: Family businesses are unique because the shareholders are usually the family members. How does that affect how they function in a crisis like this?

Flack: These conversations with shareholders are never easy, but most families have established a strong mission statement and values, which are communicated to employees and shareholders alike. This mission becomes a very critical ethos for many of the conversations amongst the family shareholders. Many family businesses have been through and survived other economic crises in the past so reminding the family and shareholders about the resiliency of their business helps ease these discussions. 

Lastly I would say that this pandemic economic crisis was not created by anyone within the organization or is the result of a bad decision by management or shareholders, so these discussions tend to be a uniting discussion and without the typical family emotions [emanating] from family dynamics. So we think that most families and their shareholder groups are having an aligned set of conversations around how they get through these liquidity issues and how they support their employees. 

Vien: Do you have recommendations for business leaders on having these discussions with their families?

Flack: We do. I would say the first thing that we would recommend is to take on the tough decisions. Unfortunately management teams and shareholder teams often fail to make some of those tough decisions and often opt for a process that we would best describe as “death by 1,000 cuts.” It's important in this type of crisis to take on those tough decisions and make them timely and make them effective in order to weather through this.

The second thing we have been encouraging them to do is to manage the risks and contingencies. Don't wait for a disruption in your supply chain or a disruption in your distribution channels to start thinking about managing those risks and contingencies. Identify them upfront and very actively and very persistently manage those risks and contingencies to ensure they don't become bigger issues to disrupt the business. 

The third thing we're telling our clients is communicate. Share information. Communication during a crisis serves two really valuable purposes. The first is to inform, and the second is to motivate. Engaged and well-informed employees and shareholders are much more willing to make sacrifices that contribute to the business's future success if they know the information is out there and that they feel as though they're part of the leadership.

The other thing which becomes unique to family businesses is ensuring that they practice effective family and business governance. Effective governance is very critical for family ownership because it helps to make sure that the family is informed, and you may have shareholders that aren't in the day-to-day of the business. So ensuring that you have effective governance, which includes communication, is really important.

And then lastly, family businesses are known for their values and their stewardship, and they're driven by those values in the relationship that they have with their employees, with their customers, and most particularly with their communities. During times of stress like this, that we're having, family members and employees need to see demonstrations of the family values in order to have a sense of stability, which is extremely important. While this is putting a lot of pressure on family businesses for their liquidity, we still think it's really important for those family businesses to continue to lead, put philanthropy in their communities, and continue to demonstrate those values that they've been demonstrating for so many years. 

Vien: Obviously many of your clients are going to have a strong emotional connection to their businesses. Do you see any clients taking a cut in their personal dividends to help their businesses continue?

Flack: We are. That was almost one of the things that we saw immediately happening with family businesses. We are seeing where our family businesses are taking either a significant reduction or even a full suspension of their dividends in order to preserve that cash. We've actually also even seeing where some family businesses are seeking loans or capital infusions from their shareholders to try to boost their cash resilience to weather the storm. 

Vien: How can continuity planning help businesses in a situation like this?

Flack: Continuity planning gives a family business a starting playbook. Having a plan will give the family business leaders structure. It will help them define roles and assignments, and it also will help them — hopefully give them some reliable tactics to leverage during these times. Now I will fully tell you that I don't know that many of our clients had a specific continuity plan to address a global pandemic. But one of the things that I've seen through our firm, which I think other family businesses are also following, is in our firm we've been leveraging our continuity plan playbook as it relates to other types of disruptive activities, like if we had a hurricane at an office and it required all of our people to be removed from the office and work remotely, or if there were some other type of terrorist disruption to our physical office space. That's the playbook that we’re running as an organization with our own firm. That's also what we're seeing with family businesses. There is contingent planning if they had a disruption of not being able to go into the worksite, not being able to use, maybe, certain warehouses. So we're seeing more family businesses are making a judgment to maybe close some of their distribution centers and leave some of them open in order to try to mitigate the risk of the virus spreading within the organization while still trying to continue to ship goods and continue to keep the business running. I don't believe that there's one that they may have developed for specifically for a global pandemic, but I do think there are parts of their continuity plans that are very easily leveraged at a time like this to help them kind of work through the different roles and assignments to address the crisis. 

The other observation I would have is, I would want family businesses to consider to leverage some of the senior members of their family as part of communicating and as part of executing a continuity plan. Some of that wise experience of some of the senior members of the family that may have been in active leadership roles during other crises in the past may be very valuable today to help coach the existing management team, as well as be part of that communication to the employees to help with that stability. 

Vien: Again that was Jonathan Flack, the U.S. family business leader at PwC. During our talk he mentioned that many clients are coming to them with questions about the various stimulus packages and about how the can apply to them. PwC and the AICPA both have resources online to help you and your clients with that process. You can access the AICPA Coronavirus Resource Center by going to the AICPA homepage and clicking on the green button, and you can access the PwC resources at You can also visit the Journal of Accountancy’s coronavirus page at or by going to our homepage and scrolling down until you see the Resources box.

This has been the Journal of Accountancy podcast. Thank you for listening.