Family business suffers from coronacrisis but remains optimistic

The 270,000 Dutch family businesses, like many other companies, have been struck hard by the coronacrisis. The family businesses expect an average turnover loss in April 2020 of 40% compared to April 2019. Already 22% of last year’s profitable family businesses do not expect to make a profit. They expect to make a loss for the whole of 2020. This is evident from the results of the RSM-Nyenrode Family Businesses research panel from early April 2020. This also shows that family businesses do everything they can to keep their employees employed and that they are optimistic about the future.

Family businesses prefer to consume their equity rather than lay off their staff. Almost 60% of the family businesses do not expect a decrease in the number of employees compared to the same period in 2019. In 36% of the family businesses, temporary contracts will not be renewed. In total, 8.2% lower this quarter than in the second quarter of 2019. On average, family businesses expect to manage this Corona Crisis for 10.3 months, but 12% of family businesses think they will manage no longer than three months.

Government measures

The presidents of family businesses are fairly satisfied with the actions of the government during the Corona Crisis, 22% are not satisfied. However, 54% of the presidents say that the Tax Authorities should now automatically grant a tax extension instead of businesses having to submit a request for this.

Laura Bles-Temme, Head of Tax at RSM explains the outcome of the study: “The satisfied reactions of the presidents of family businesses show that they appreciate and support government measures. It is good that the manner of applying for postponement has now become simpler, so that postponement does not have to be applied for per tax assessment. I also expect may entrepreneurs to take the opportunity to extend the tax deferral for an additional three months.”

Retention of staff

Roberto Flören, RSM professor of Family Business and Business Transfer, explains his research: “The research shows that family businesses do everything they can to keep their staff. They prefer to consume equity (64%) and forgo dividends (92%) rather than lay off staff.” The long-term perspective of family businesses is evident in the reteti0on of staff in times of crisis, Flören explains: “Most family businesses (80%) are optimistic about the future. Because they anticipate that things will improve again after the Corona Crisis, hence their businesses and owners are in pain now. The moment the situation improves they will desperately need they recruited staff. Now they are taking advantage of the situation by looking into innovations and adjusting company policy. While for several them this crisis gives rise to reflection. In the future they want to make their company less dependent on themselves.”

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