By Prof. Enrique Soriano
That was the message I shared to those who participated in a Save our Businesses (SOB) advocacy webinar jointly organized by Daily Guardian, Futuresmart Resources and Wong+Bernstein Advisory Group last Saturday. As the world economy grounds to a complete halt, a looming recession is at our doorstep and deaths and infections continue to surge everywhere, it is time for business owners to assess the impact of an agonizingly painful journey towards normalcy both on the family and the business aspect. The stakes are high and the pressure to survive can be mentally draining. But one thing is clear, business owners must reflect on how they started with nothing except their shirts on their backs and how they struggled during their start up days.
Looking beyond this lockdown, we can expect that losses will be staggering. We also acknowledge that this unprecedented crisis is wrought with uncertainty. Yes, we can see the tip of the iceberg but we do not know how deep it is. If the infection spread decelerates, we can anticipate that the crisis will be severely felt in the third and fourth quarter of 2020. However, if the pandemic worsens, the economic impact will extend until the end of 2021. While we are all in a state of shock and making sense of this unheard-of disruption, it is important for business leaders to take a step back and make a full assessment on the severity of the impact and immediately plan on how to navigate, weather and hopefully bounce back as quickly as possible.
Upside-down world
In a well written Forbes article by globally recognized family business expert and author Prof Dennis Jaffe, he highlighted that “today’s pandemic crisis is turning everyone’s world upside-down in ways that couldn’t have been anticipated just a short time ago. After a half-century of observing and sometimes resisting the increasing pace of change and the many innovations disrupting our behavior, we are now encountering a situation that makes it impossible not to change. However, there appears to be no clear way to reasonably plan what to do next or how to manage the extent of the upheaval. Yet every day we must act and even make some tough choices—despite the lack of any reliable information about the best direction to take.” He further added that “every business, large and small, is feeling threatened, and every family faces deep challenges just to stay afloat. Without being able to go to work or attend school right now, we cannot imagine how life will return to some sense of normalcy. That uncertainty and inability to control makes us anxious. And when we’re anxious, we can do impulsive, short-sighted things.”
As a family business advisor, my advice to entrepreneurs and business leaders is straightforward: Never, never give up even when the going gets tough. Sail along despite the headwinds and manage your emotions! When we help turnaround businesses, our go-to-mindset will always be on a long-term view but in our current situation, it’s nothing but crafting a short-term future. Time can be our friend or foe and speed in decision making is paramount. Additionally, alignment of strategies with well-defined roles within the ownership and management team is extremely important. Every owner must learn how to adapt by constantly tinkering with business models outside his industry.
Focus on solutions
At this juncture, it is in the best interest of owners to break down the issues so ICU’s (Important, Critical, Urgent) that need immediate intervention is prioritized. As you start sorting the problems, you can now rationally focus on how you can move forward with a certain degree of confidence. One of the first few items that are usually raised is the current financial state of the business. Understandably, when the lockdown restriction was imposed, most companies experienced a sharp downturn in their top lines. When sales dropped, the natural reaction of the owners was to preserve cash while maintaining a workforce.
To be continued…
