Family Business Regulator, Joseph Gerada, is hopeful the Budget for 2021 will include measures and incentives that will further help family enterprises, which are the backbone of the economy, adding that, despite the impact left by the pandemic, no business registered with his office has officially declared it had to close down due to COVID-19.

Although the Family Business Office (FBO) does not have local statistics on the effect that the COVID-19 pandemic had on Maltese family businesses, it has been monitoring statistics provided by foreign firms and institutions.

A recent survey carried out by Banyan Global on family businesses, across the world, shows that 82 per cent had seen a negative impact on their business from the coronavirus outbreak and about half of those said the impact has been significant.

“However, I believe that our family businesses are well-positioned to survive this business shock. In Malta, I can gladly say that we have had no de-registrations to date due to business closure since the COVID-19 pandemic hit our islands.

“This, in itself, is very encouraging and a sign that our family businesses are resilient and prepared to withstand the tests and obstacles faced during a crisis such as the one we are currently experiencing,” Dr Gerada remarked.

The FBO has been informed of family businesses that have had to make drastic changes to the way they were used to doing business.

Dr Gerada sees nothing wrong with that. On the contrary, he considers such “nimbleness, agility and the ability to adapt to the current market situations as elements that can put a business ahead of its competition.”

He pointed out that family businesses experience a certain pressure not to fail, also due to the reputation and legacy they would have established over the years and this makes them hardy and able to take tough decisions so they can adapt and survive.

In fact, the Regulator explains, family businesses differ from other companies in that their form of ownership gives them the ability to take critical actions that could help them through difficult times such as the ones the country and the world are going through right now.

More than ever before, it is in times like these that one must think out of the box and look at ways of adapting so that one’s business would be able to survive and cope with the difficult times ahead, Dr Gerada said, adding that this was something that a number of family businesses had to do and rightly so.

Some businesses, he continued, have managed to take action on their own while others require the assistance or the support of others to help them adapt their business model in order to deal with the ever-changing circumstances and demands.

He noted that, thanks to various support measures, including the Investment Aid for COVID-19 Products and the Business Re-engineering Consultancy incentives administered by Malta Enterprise, together with the Business Advisory incentive offered to registered family businesses, local enterprises can get the help and guidance they require to make the right decisions for their business to adapt and survive.

Dr Gerada explained that a number of local companies have been proactive and adapted some lines of business with agility; for example a number of clothing companies have switched to the production of masks and other protective equipment, chemical manufacturing companies are producing sanitisers and hand sanitising products, taxi companies have switched to delivery services, and restaurants and retail outlets have introduced e-commerce sites to be able to maintain a minimum level of sales and keep their businesses and workforce going.

On the more creative side, he added, printing companies switched to 3D printing and are making face shields.

One such company, he pointed out, also managed to export its product during these difficult times, thus entering the export market.

The FBO head recalled that when, during the last quarter of 2019, his office was planning its strategy for this year, one of the main objectives was to focus more on reaching out to family businesses and business organisations, service providers and other constituted bodies to provide information on the role and function of the Family Business Office, the incentives it offers to family businesses and how it can be of support.

Presentations were made and one-to-one meetings held in January and February. A number of other conferences and seminars were being planned for the rest of this year.

However, all those plans had to be stopped due to the COVID-19 crisis and meetings had to be held online. Still, the FBO plans to hold a conference during this year’s SME week in November, although it will probably take the form of a webinar.

The FBO is also collaborating with a new TV programme, which will be aired on the national TV channel as from 30th of September, with a focus on sharing experiences of family businesses, as well as providing information on good practices, legacy issues and generational renewal.

“We are very excited about this project and I am sure it will help disseminate information that family businesses will find both helpful as well as positively motivating,” Dr Gerada said.

Another area the FBO is working on is the launch of new incentives to be introduced on 1st January 2021.

By looking at what we have already been offering and the take-up on these incentives, the office is looking into ways of improving the incentives in place and creating new ones to cater for areas where family businesses require most support, the Regulator explained.

Given the importance of the internet and remote access to Government services, the FBO is also focusing a lot of energy on its website, which will be revamped throughout 2021, he added.

The plans in this regard are to help reduce bureaucracy and to give family enterprises, which are very busy with the day-to-day management of their business, better access to the office’s services, he explained. Moving on, and as the presentation of the Budget for 2021 approaches, Dr Gerada said the FBO “definitely” hopes to see the renewal of the incentives being offered to support the transfer inter vivos of family businesses.

These incentives, offered by the Ministry of Finance, have come a long way in promoting the family business succession planning and generational renewal, he pointed out.

Thanks to the tax exemptions and incentives, he went on, the Government helped reduce the obstacles faced by family businesses when it comes to making the tough decisions on how and when to pass the business to the next generation.

The FBO would also like to see more investment in training, education and reskilling.

“We are working very closely with Malta Enterprise and other entities on the development of training incentives and I am sure the Government will see the importance of further investing in this.

Apart from the importance of receiving training in areas that will help the business grow further, we also need to train our family businesses to think out of the box and explore new revenue streams so they can spread their risk further and are better prepared for rainy days,” Dr Gerada asserted.

Stressing that family businesses are the backbone of the economy, the Regulator said it is, therefore, crucial that the authorities would focus on their needs and continue investing in them.

He pointed out that, over the past months, many businesses realised the importance of the internet, pointing to ecommerce as the way forward.

However, the Regulator cautioned, Maltese businesses are at a disadvantage when it comes to competing with other businesses within Europe due to Malta’s insularity, the reliance on limited connectivity – including internet connectivity – as well as higher transportation, export and postage costs.

He feels the Government needs to explore ways of building a case so that Malta’s insularity is further given recognition, with the economy getting the assistance and subsidies it requires so that businesses can truly compete on a level playing field across Europe.

This interview was first carried on the September edition of The Malta Business Observer