The recession has been brutal for many businesses, but perhaps none more so than small family run businesses. In the land of entrepreneurship, the United States, about 90% of all businesses are actually family owned and run; mostly small businesses with less than 20 employees. The mom and pop store, the restaurant round the corner, the self employed consultant. They have been the massively affected as this article lays out.
This blog is not meant to be chronicler of the world’s woes, If the last couple of posts have left you thinking that way, its not meant to be for long. But its just that we, as the fortunate few who have jobs intact and can continue to take care of our families, perhaps ought to reflect more on what the less fortunate are going through.
What family businesses have faced is a sudden steep fall in demand, complete drying up of credit and no robustness to weather such a storm. Any well run company will find it difficult to handle this, as is very evident these days. But traditional family businesses are even more vulnerable - often difficult to change, don’t see the storm coming early enough and when the gale force winds are buffeting, don’t have the strength to keep standing. Like a mighty oak tree, they fall.
Its when they get into trouble that families discover that there is a double whammy. Closure of a family business is invariably concomitant with personal bankruptcy. For the fine print in any loan document has it that every personal asset of the borrower can be repossessed. This report captures this frightening phenomenon of double bankruptcies. Sure, the bloke should have read the fine print before he took on the loan. But honestly, who really does. Do we do it on the multitude of legal stuff we sign – if we did, we would never have a credit card for the blah blah in a credit card agreement is absolutely scandalous.
It’s a tough world out there. But when a family business, which has perhaps been in existence for two generations, falls, it’s a sad and poignant moment, Especially as the article says, for the family, its loyal customers and its even more loyal employees. I have to echo athivas’s comment on an earlier post – perhaps emotion has no place in the business world of today. Sadly , that seems to be true.
PS – If you were a tad surprised at this blog sporting a new look, its all thanks to the wonderful Srivats. Sri berated me for a blog that looked like a cross between an owl and a donkey. When I protested that it was because blogger is blocked where I live and I can’t change any layouts, he very kindly offered to do it for me. Where in the world can you find blogger friends like this. So he created a swank, funky look which I sheepishly argued wasn’t age appropriate for me. In exasperation Sri toned it down to the look that you see now. Thank you Sri – you are truly sensational.
This blog is not meant to be chronicler of the world’s woes, If the last couple of posts have left you thinking that way, its not meant to be for long. But its just that we, as the fortunate few who have jobs intact and can continue to take care of our families, perhaps ought to reflect more on what the less fortunate are going through.
What family businesses have faced is a sudden steep fall in demand, complete drying up of credit and no robustness to weather such a storm. Any well run company will find it difficult to handle this, as is very evident these days. But traditional family businesses are even more vulnerable - often difficult to change, don’t see the storm coming early enough and when the gale force winds are buffeting, don’t have the strength to keep standing. Like a mighty oak tree, they fall.
Its when they get into trouble that families discover that there is a double whammy. Closure of a family business is invariably concomitant with personal bankruptcy. For the fine print in any loan document has it that every personal asset of the borrower can be repossessed. This report captures this frightening phenomenon of double bankruptcies. Sure, the bloke should have read the fine print before he took on the loan. But honestly, who really does. Do we do it on the multitude of legal stuff we sign – if we did, we would never have a credit card for the blah blah in a credit card agreement is absolutely scandalous.
It’s a tough world out there. But when a family business, which has perhaps been in existence for two generations, falls, it’s a sad and poignant moment, Especially as the article says, for the family, its loyal customers and its even more loyal employees. I have to echo athivas’s comment on an earlier post – perhaps emotion has no place in the business world of today. Sadly , that seems to be true.
PS – If you were a tad surprised at this blog sporting a new look, its all thanks to the wonderful Srivats. Sri berated me for a blog that looked like a cross between an owl and a donkey. When I protested that it was because blogger is blocked where I live and I can’t change any layouts, he very kindly offered to do it for me. Where in the world can you find blogger friends like this. So he created a swank, funky look which I sheepishly argued wasn’t age appropriate for me. In exasperation Sri toned it down to the look that you see now. Thank you Sri – you are truly sensational.
