Family businesses may be best equipped to ride out recession, Barclays Wealth report says - Business First of Columbus:

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With difficult economic timews ahead, Doyle would be willing to give up her salaru again to keep thecompany afloat. “Wr would do without the pay, as opposec to laying people off,” said Doyle, who founderd Compassionate Care HomeHelpers Inc., a non-medica in-home service provider, with the help of her sistere and mother. Other U.S. family businesses may make the sametougnh decisions. According to a Barclays Wealth report earliefthis year, this factor and otherd may mean family businesses are particularly well-positionesd to ride out the downturn.
the report points to severaol key characteristics that many familybusinesses share, such as a long-ter outlook, tendency toward risk aversion, low debt load and managementf agility. “If you look at the sacrifices that can be made in the shortr term in regard to wages they may be able to take a little bit less in saidRay Vargo, director of the Smalkl Business Development Center at the University of Pittsburgh’ Institute for Entrepreneurial Excellence. Dianee Sandstrom, consulting manager with Duquesne University’s Smalol Business Development Center, said about 25 percent to 30 percent of small businesses in the region fall intothe family-owne category.
“Sometimes, the family owned businesses are not in such a dire Sandstrom said. “They will fund an expansion using sweat equity instead of goinfginto debt.” Sweat equity couls simply mean agreeing to work longer hours for a certaihn period of time to see the family businesa through a rough spot, she said. The decision-making process in a familty owned business also may be more efficienf than other typesof companies, Sandstromn said. “They can make a change much she said. Family-owned businesses also will sometimes not take on a big burdemn of debt because they want to pass thebusinessx down, Sandstrom said.
Doyle’s experience with Compassionate Care is The company, which is only now close to profitability, coulfd not afford to pay its office stafft — Doyle, her sister and their motherr — for the first two years of its so the three went without a “If we didn’t do that, we wouldn’t stil l be here today,” Doylwe said. “None of us got paid to do any of Doyle said communication is extremelgy easy between motherand daughters, and they can reach each othert 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 again gowithouft salary, although Doyle doesn’t expect the downturn to so thoroughlyy impact the company to make that “We still will do that if need she said. One danger for family-ownefd firms, however, is that, because much of theitr debt may bepersonally guaranteed, when a business it could be financially devastating for the family, Vargk said. “I’ve seen some situations where family member have gone out to borroew everything theycould — they think it is goin to turn around,” he said. “When a person is signing their name onthe line, it’s personap debt.
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