A.E. Schmidt Company, a St. Louis pool table manufacturer, is understaffed. But instead of hiring new workers, owner Kurt Schmidt has been heaping hours onto already busy employees. For some, that means 70 to 80 hours a week at a lower pay rate. "Typically, the best way is to do the work of two with one person," he says. While employees at another company might not put up with the extra burden, some of Schmidt's hardest workers are his wife and kids, who know that a day's sales can determine what's for dinner.

Many family businesses are strained by the down economy, but because of their unique composition, they may be poised to weather the recession better than their competitors. "There's more of a tendency to pull together," says Schmidt. "Overall, it's not hard to ask someone to take a cut if they're family," he says.

Family business owners can be more creative in terms of compensation because relatives may be more willing to work longer hours, take a pay cut, or defer their salary until business improves. "They have more flexibility in terms of making decisions," says Tom Juenemann, executive director of the Institute for Family-Owned Business in Portland, Maine. "So they tend to me more nimble," he says.

Schmidt is heartened by the fact that his 5th generation company has pulled through tough times before. "They went through the depression, and I have been through three economic downturns myself," he says. Deep-rooted businesses, like his, may also have a leg-up because predecessors pass on strategies for survival.

Yet, while uniquely resilient in some ways, when a severe downturn strikes a family business, it can devastate not only the company, but a support network as well. When most kin are cooperating on a business venture, those family members one might have otherwise turned to for financial help will likely be in the same dire straits.