Tariffs, turmoil, and family tiffs: navigating the current chaos as a family enterprise
Multigenerational enterprising families are not easily shaken. Over decades and sometimes centuries they’ve grown accustomed to uncertainty and have honed their ability to make smart decisions in ambiguous conditions. They know how to ride out technological disruptions and the occasional natural or man-made shock. But it’s one thing to navigate such events, and quite another to operate in a world where legal interpretations, taxes, regulations, judicial rulings, trade agreements, and the like are upended and seem to change on a daily basis, with no apparent ability to predict which way they will change next. These conditions, and the resulting sense of powerlessness, can create what is known as learned helplessness, which can lead to paralysis and worse.
For many businesses, the current outlook is less optimistic than it was just months ago. And while one might argue that this is for a lot of reasons, here we will mention just three:
1) International trade and supply change effects appear to be unpredictable
2) Economic and regulatory uncertainty has led to retrenched investment at all levels
3) Capital costs have generally increased and while interest rates might not have gone up yet, debt and equity capital seem to be less available
In sum, forecasts are unreliable, long-term investments are on hold, and anxiety about a looming recession, or worse, is spreading.
For family enterprises, external pressures like these often ignite internal flashpoints. As uncertainty rises, margins threaten to shrink, and cash flows become insecure, shareholder meetings can grow tense. Some of you may recall the difficult conversations around paused dividends during COVID. If the family is not firmly united as business performance worsens, then fingers are pointed, blame is leveled, and the bonds of family threaten to break.
In this short article, we explore how family enterprise owners and stewards can navigate today’s uncertainty, both in the business and within the family. We’ll outline just a few small, concrete actions you can take on both fronts to help protect and preserve your family legacy through this challenging phase.
Supporting Your Business Through Economic Uncertainty
1 - Reinforce Financial Resilience: Cash Flow Forecasting and Stress-Testing
The current situation, unlike most external shocks (like COVID), while we might not like what we can predict, their effects are largely predictable. In those environments simply having large cash reserves might be enough to see you through the bad times. This is not what we’re facing today, where we don’t know what will happen next, and where predictions might change on a daily basis. We are literally in chaotic times facing unpredictable turbulence.
Knowing what to do, as in whether to retrench or expand, requires dynamic cash flow forecasting. If you don’t have an FP&A function (Financial Planning and Analysis), consider hiring a consultant who can perform that service. Hopefully, your cash flow forecasting models are built in a way that allows assumptions to be changed easily so the model can be stress tested; for example, changing assumptions about interest rates or raw materials prices. Ask your FP&A team breakeven stress-testing questions like:
What impact do today’s changes in policies, taxes, tariffs, regulations, etc. have on when our cash flow goes negative or when our banking covenants will be violated?
How much would sales have to decline, at current prices, for cash flow to go negative or for banking covenants to be violated?
What is the price at which input costs would have to go up to for cash flow to go negative or for banking covenants to be violated?
How much would raw materials prices (prices to us so inclusive of tariffs) have to go up for cash flow to go negative or for banking covenants to be violated?
How much would labor have to go up for cash flow to go negative or for banking covenants to be violated?
How much would our transportation and logistics costs have to go up for cash flow to go negative or for banking covenants to be violated?
How much would interest rates have to increase for cash flow to go negative or for banking covenants to be violated?
For the above, what would the impact be if we stopped all but tax distributions to shareholders?
For the above, what would the impact be if we added 10 or 15 days to our payables cycle, or reduced 10 or 15 days to our receivables cycle?
For the above, can we determine at what points and what would be the indicators that we should issue a capital call?
The answers to questions such as these will greatly inform the moves you need to make – and when. You should also define what level of liquidity you likely need over the next six to 12 months, and whether you should revisit your credit lines or negotiate terms with banks, customers, and suppliers before conditions worsen.
Once you have some ideas about changes that could have material impact on your ability to operate, start developing plans that have clear triggers and actions. For example, what would trigger a workforce reduction, what would trigger a reduction or halting of dividends or distributions to shareholders, what would trigger asking for longer terms to pay suppliers (if you can, try exploring this in advance), what would cause us to sell an asset and what assets we would sell, and so forth. Try to get as specific as you can when developing these plans. In uncertain times, cash is king (and this truism is a huge reason why people are reducing long-term investment right now), so revisit your liquidity strategy. Are your reserves enough to weather a sustained downturn, or would a temporary shock require debt restructuring, asset sales, or capital calls? If you think you might make capital calls, now is the time to give your shareholder base a heads-up!
Evaluate:
Are we holding excess inventory or underperforming assets we could monetize?
Can we afford to continue our current capital expenditure plans? What should we/ can we put off until time become more certain?
Should we build inventory to reduce future costs if we believe tariffs will rise?
2 - Strengthen Scenario Planning and Risk Management
While forecasts are increasingly unreliable, preparing for a range of plausible futures can keep you nimble and responsive. Scenario planning should not aim to predict the future, but rather to prepare your business to adapt swiftly and smartly as conditions change.
Build a small set of alternative futures (e.g., recession, high inflation, regulatory tightening) and assess how each would affect your key business drivers: sales, costs, capital, people.
Engage your leadership team in a structured review of risks: Where are we most exposed? What dominoes could fall if tariffs spike, if a key supplier fails, or if capital becomes prohibitively expensive?
For each scenario, define a few critical decisions you might need to make (e.g., deferring investment, exiting markets, renegotiating contracts), and outline what indicators would trigger those decisions.
Make risk management a team sport. Don’t leave this work to a single CFO or strategist—engage operations, HR, and even outside advisors to ensure a comprehensive view.
3 - Monitor Regulatory & Political Signals Closely
When the rules of the game are constantly changing, it pays to watch the referee. Stay informed and proactive, especially in sectors that are politically sensitive or globally exposed.
Assign someone (internal or external) to track changes in tax codes, tariffs, immigration policies, and trade agreements. This could be your general counsel, CFO, or a trusted advisor from your legal or accounting firm – many of these firms have dedicated teams that monitor such changes. Trade associations can be another valuable source of curated updates and scenario briefings.
Don’t just track what’s happening but discuss what it means with your decision-makers. Bring policy updates into your leadership meetings regularly.
In especially volatile sectors (like healthcare, energy, and tech), consider establishing a “policy watch group” to model impact and advise management and the board.
4 - Leverage your Board (if you have one)
In chaotic times, your board can be a powerful asset:
Consider more frequent (even monthly) board calls focused on scenario responses and liquidity updates.
Empower a “crisis group” of board members and executives to meet in between formal sessions to make urgent recommendations.
Clarify roles: What decisions rest with management? What needs board input? And what, if anything, requires shareholder involvement?
If your current governance structure slows things down or causes confusion, use this as a reason to revisit and improve it. Agility now is essential, and your governance system should support that.
5. Double Down on Communication
In the fog of uncertainty, people crave direction and transparency. The best leaders over-communicate – not to project false certainty, but to build trust, alignment, and calm.
Keep your employees, customers, and suppliers informed. Share what you know, what you don’t, and what you’re doing to stay resilient.
Consider issuing a weekly or bi-weekly "State of the Business" update during turbulent stretches to calm nerves and keep stakeholders grounded in facts, not speculation.
Use multiple channels, such as email, video, virtual meetings, and keep messages short, clear, and consistent.
Don’t forget your family shareholders. Make sure they hear directly and regularly from business leaders, not just through the grapevine or via quarterly statements (more on that below!)
Maintaining Family Shareholder Unity and Commitment in Times of Chaos
1 - Prioritize Family Unity
You might feel like you don’t have time to attend to family unity, but that would be an enormous mistake with serious long-term implications. The family needs to be aligned, unified, and supportive of the business and those leading it through turmoil. The family council, if you have one, is a great mechanism for shareholder communication and engagement during times of uncertainty; family board members are also a great resource to leverage when reaching out to and engaging the family shareholder group. Activities like family townhalls or educational sessions (more below) can be helpful in creating a shared understanding of the business challenges and needs. Other messages to send might include:
Come back to the sense of shared purpose and remind the family why they are in this together, beyond financial returns.
Anchor your communications in family values, stewardship, and long-term thinking.
Encourage family-wide conversations about what “resilience” means to them.
2 - Recognize and Minimize Unhelpful Interference
Now is not the time for finger pointing, being an ‘arm-chair general,’ being a back seat driver, or any metaphor that represents someone without front line knowledge trying to advise someone facing rapidly changing and potentially life-threatening decisions. If you’ve ever been in the cockpit of a plane while the pilot is trying to land in rough conditions, you know you don’t speak unless you are absolutely certain of what you are saying and what you are saying is immediately important. A problem for many family shareholder groups is that there is almost always a number of people who just don’t trust and won’t get on board with anything that’s proposed. Whatever the reasons for their mistrust and opposition might be, executive leadership likely won’t have the time nor patience to deal with it when times get bad. So, what might they do?
A strategy that works for many family shareholder groups is to engage trusted family members to run interference. This can help the naturally distrusting member to feel heard, valued, and connected.
Remind family shareholders not to do things on behalf of the company without coordinating, and to not reach out to employees inside the business to share ideas, concerns, or give feedback randomly.
If and when shareholders can’t resist the urge to point fingers or advise from the backseat, gently point out their behavior.
Always remind family shareholders and stewards that while their intentions are noble, in times of rapid change and uncertainty confusion can cause major setbacks.
3 - Communicate Early, Often, and Transparently
In situations such as these, there is little more that can be done other than maintaining a constant flow of communication about what is happening and why and being clear and genuine that opinions will be taken into consideration if and when time permits. For the rest of the family, make sure they are informed, and forewarned that things may get (much) worse before they get better.
Uncertainty outside the business often amplifies emotions within the family. Fear, frustration, and diverging risk tolerances can surface quickly, and sometimes destructively, especially if there is no preparation for uncertain times or if there are no mechanisms in place to allow shareholder opinions to be expressed. Now is the time to ensure your family governance is active and equipped to listen. Ownership forums, next-gen updates, and clear communication channels are vital. Even simple practices, like regular town halls or anonymous Q&As, can reduce misunderstanding and build cohesion. We typically recommend that you:
Don’t wait until people ask questions – proactively share how the business is adapting. The family council can have a key role in distributing relevant information and answering shareholder questions.
Think about whether you have an effective system in place to keep family informed and a structured space for shareholders to raise concerns or ask questions? For example, you could use structured forums like town halls, digital updates, or family meetings to listen and respond to concerns.
Make sure to use plain language and visuals to explain the macro context, risk responses, and possible outcomes.
Always keep it consistent and use the same core message across all channels and meetings!
4 - Build Financial Literacy and Business Understanding
In uncertain times, the gap between what's happening in the business and what shareholders understand can widen dangerously. A well-informed shareholder group is more likely to be calm, collaborative, and patient, even when dividends are cut or bold decisions are made.
Offer short, accessible learning sessions, online or in-person, explaining key financial concepts (liquidity, profitability, cash flow).
Break down macroeconomic dynamics: interest rates, inflation, political volatility and how they affect your business.
Use real company data and scenario planning tools to illustrate what may happen and why.
Focus on clarity, not complexity: visuals, analogies, and Q&A go a long way.
Remember: Financial literacy isn't just for adults. Engage rising-gen family members too.
5 - Strengthen and Activate Family Governance
During times of volatility, strong family governance structures can act as stabilizers. They provide clarity, reduce noise, and help align the family around shared goals and decisions.
Make sure your family council or shareholder committee is active, visible, and empowered to communicate.
You might want to segment your outreach by generation to ensure relevance and engagement – the younger members of the rising generation might benefit from more context than more experienced family shareholders.
This might be a good time to revisit key agreements: Are dividend policies, voting rules, and decision-making authority still fit for purpose?
Confirm there's a clear process for making urgent decisions efficiently, should conditions worsen.
Ultimately, families with strong governance weather storms better—because expectations are clear, and trust is maintained.
What’s next?
This uncertainty will not last forever – even if it may last an inordinately long time. You might remember the lesson of Admiral James Stockdale, who reflected on those who survived brutal circumstances as prisoners of war, "You must never confuse faith that you will prevail in the end—which you can never afford to lose—with the discipline to confront the most brutal facts of your current reality, whatever they might be." Also, take the advice of Holocaust survivor Viktor Frankl, “I speak of a tragic optimism, that is, an optimism in the face of tragedy and in view of the human potential which at its best always allows for: (1) turning suffering into a human achievement and accomplishment; (2) deriving from guilt the opportunity to change oneself for the better; and (3) deriving from life's transitoriness an incentive to take responsible action.”
In the end, it is about surviving, learning, and growing ever closer in the face of grand adversity. Families can excel at this, or they can fail epically. From our experience, families that face bitter realities early on fare much better than those who respond retroactively, once things have gotten much worse. We remain hopeful that the current administration moves in ways to bring more predictability to economic policy, but as we often say in the boardroom, hope is not a strategy. A more effective strategy than hope is understanding the constraints of your business and putting in place mechanisms for quick and adequate responses and fostering open communication to set your family up to learn and grow together during times of turmoil.
If your family can learn and grow together, then get read to celebrate and express thanks to reinforce what you have accomplished as a family and set the stage for a united and prosperous future.
This article was first published in an abbreviated version on www.familybusiness.org on April 8, 2025.
