“IT IS VERY likely that this year the global economy will experience its worst recession since the Great Depression” of the 1930s, IMF chief economist Gita Gopinath said in the foreword to the latest World Economic Outlook. She further added “surpassing that seen during the global financial crisis a decade ago.” Despite this grim scenario, family business owners must never give up. As a matter of fact, that bleak forecast should now challenge business owners to do whatever it takes to survive. With the outbreak getting worse and consumer confidence sliding, the impact across all industries is expected to stretch for years, forcing many companies to close down and some desperately hanging on to a lifeline by bridging capital to survive the crisis.
Family owned businesses are resilient if they are united
In emerging Asia, March quarter results for businesses showed a sharp drop. April and May will be worse and the expected contraction in June will result in a recession for most economies. The domino effect has begun, starting with the economic downturn in China, the world’s second biggest economy, contracting for the first time since 1976, right after the cultural revolution. Economies in Europe and the U.S. will follow with a delay of a month or two given that the pandemic started late. But the outbreak has picked up speed and is expected to cause more economic damage.
Even with the impending lifting of the lockdown and the reopening of our economy in June, the challenge is how owners can overcome the overwhelming pressure of keeping their businesses afloat despite tremendous losses as opposed to the natural reaction of stopping the bloodbath and closing down the business permanently. How is your family business coping in these challenging times? What are your strategies in navigating this disruption? Are your family values guiding you as you develop your plans? We know that companies big and small and in large numbers, are declaring significant drop in profits, net losses and closures everywhere. Should owners just preserve cash and let go of their workforce? These decisions are tough and challenging and can test one’s character. With the social and economic disruption happening everywhere, business owners are feeling helpless and in a bind.
Leaders must act now
My challenge is this: Innovate or die, repurpose or you get left behind! Everything you initiate now is always based on a short term future. Every single day of inaction will further damage the company that you grew from blood, sweat and tears. I used these quotes to provoke business owners to act swiftly and decisively and to be authentic leaders while leading an impacted organization. In my recent advocacy webinar talk organized by Anvil Business Club, a preeminent association of young Filipino Chinese entrepreneurs, I reiterated the call for business owners to focus on change and speed if they are to overcome this crisis. While exhibiting strong and compassionate leadership, owners should at all times manifest objectivity, plan short to long-term goals, question the current business practices and relentlessly innovate by looking beyond their industries. The title “Facing Adversity and Thinking Ahead” is attributed to an esteemed academic colleague, Prof. Hiten Muchhala who has written an exceptional article worth reading with the same title.
Be strategic
Looking beyond the global health crisis, we recognized that the economic losses will be staggering. We also acknowledge that this prolonged fight to mitigate the impact is wrought with uncertainty. The Asian Development Bank (ADB) warned of “the possibility of severe financial turmoil and financial crises cannot be discounted.” It also raised alarm bells for the Philippine economy forecasting the country’s GDP would lose 0.59 percent or about $1.94 billion (P98.29 billion) and 252,130 would lose their jobs.
With all these extreme uncertainties as the only certainty, the key is to immediately assess the impact, plan your cash flow and your workforce, evaluate the risks, revisit your vision, innovate, implement and pray. This may be the hardest battle you will ever fight!/PN
