Fall in consumer disposable income hitting small businesses the hardest

Family businesses have been hit harder by the recession and must plan to survive, says PricewaterhouseCoopers advisory partner, Anthony Reidy.

The majority of family businesses are SMEs relying on disposable income, so they have been hit hardest as the recession has bitten into consumers’ pockets. “The recession has had a bigger impact on family businesses, as they are more reliant on the domestic economy,” says Mr Reidy.

Businesses cannot see beyond the next set of payments and keeping the doors open, so they are missing opportunities to expand.

“A siege mentality has developed in family businesses to make sure they survive to pay their employees. A point has to come when you move beyond survival mode and start planning for the new norm,” he says.

Problematically, many family businesses shifted from their core business during the boom and dabbled in other areas.

Many businesses made the ill-fated decision of becoming property developers and they are now saddled with huge debts which impact their core business.

It is hard for these businesses to go forward, unless they receive resolution to their debt issues.

Mr Reidy says that businesses must refocus on what they do best, on their original selling point, and plan for the future.

Mr Reidy says that family businesses need to develop strategic five-year plans, projections of where they will be in five years and what success will look like. Mr Reidy says that, frequently, family businesses don’t make decisions with a cold eye and he says that a plan can help them focus on exactly what needs to be done. “The importance of Irish family businesses developing a clear, strategic roadmap for the future has never been more important, given the new world in which many businesses operate,” Mr Reidy says.

“This is characterised by uncertainty and lack of clarity, in relation to the future operating environment, coupled with various identified challenges impacting on Irish family business, some of which are not necessarily within the control of the business itself,” he says.