Business owners must take action. Now!

By Prof. Enrique N. Soriano

I recently flew back to Manila after doing the rounds in Asia presiding emergency meetings and facilitating and revisiting action plans with several cold and stoned-faced level executives. Understandably, most of them were  stunned after seeing sales volume plummeting by more than 50% in just a few weeks. After hopping from one plane to another, I noticed that my flights were almost empty and would see masked passengers disinfecting their own seats. On the ground, I would see virtually few passengers inside terminals. It was a surreal experience and made me wonder how airlines and the rest of this $600 billion industry are coping.  What’s more, airports support ecosystems comprising hotels, restaurants, retail stores, car rentals, taxis all the way to the Spa operators are expected to suffer the brunt when air travel remains depressed.

In a report sponsored by American Express, of the sectors studied, Philippine travel & tourism is the largest sector in terms of GDP contribution, making up almost a quarter of the country’s total GDP, ahead of Financial services (15.4 percent), Agriculture (14.8 percent) and Retail (14.8 percent).” Evenly, it is also important to highlight that the tourism sector was responsible for close to 6 million jobs last year.

With the COVID-19 outbreak spreading around the world, all industries are being jolted. In less than two months, the industry’s prospects have taken a dramatic turn for the worse. As more local transmissions sprung up and fears of unabated infection hit local communities, we can expect sharp declines in hard-hit industries, rattling supply chains further. Unfolding events are now forcing companies to downscale operations out of sheer survival.

A re-planning is a must!

It is time to revisit targets, make a full assessment on its impact coupled with risk mitigating measures. It is also the best time to check on the state of your operating expenses so you can course correct your business targets and raise the possibility of asking support from various stakeholders like landlords and creditors e.g. rental rate reduction, suspension of loan payments, etc.  Complementing this business re-planning exercise is to sweep through your current strategic plan and make risk and reward adjustments. The short and long term road for businesses can be daunting and lined with not just a few potholes but huge craters and the two-month gloom and doom picture should now be the trigger for companies to initiate a plan of action.

Fundamentally, strategic planning is defined as simply creating a “plan of action”. Originally from the Greek roots, ‘STER’ which means to spread out, usually in a military sense, and AG to drive or to lead, the word ‘strategy’ conjures up images of preparing for battle, or competition. A plan describes how you can navigate and get there despite a very challenging market. Clearly, it’s about making decisions in the present for the future and usually involves a time frame. It is both written and lived. It cannot be pieces of paper stuck in a drawer and forgotten, but must be thought through carefully.  It should reflect a flexibility and readiness to whatever the future may bring. The future can mean as short as 2 months to 12 months.

For skeptical entrepreneurs, who think their businesses are so small and feel that planning has no place in their agenda, I urge you to think and reflect on this initiative. We are experiencing an uncertain marketplace out there and your inaction coupled with the impact of the COVID-19 virus on most sectors can lead to irreversible damage to your business. Believe me, VUCA can be unforgiving! It does not distinguish between big or small businesses.  Business owners must take action, move quickly, do things that they need to do. Now!

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Prof Enrique Soriano is a World Bank/IFC Governance Consultant, Senior Advisor of Post and Powell Singapore and the Executive Director of Wong + Bernstein, a research and consulting firm in Asia that serves family businesses and family foundations. He was formerly Chair of the Marketing Cluster at the ATENEO Graduate School of Business in Manila, and is currently a visiting Senior Fellow of the IPMI International School, Jakarta.

He is an associate member of the Singapore Institute of Directors (SID) and an advisor to business families worldwide, a sought after  governance speaker at conferences, and book author, more than 200 articles and publications, including two best-selling Family Business books (Ensuring Your Family Business Legacy 2013 and 2015). You can read Prof Soriano’s business articles for free at www.Faminbusiness.com