Business Survival Guide for COVID-19 (Last Part)

By Prof. Enrique Soriano

A crisis point is indeed the moment of truth for many companies. But the biggest question is why some companies in a similar dire situation respond successfully to the challenge while others are doomed and eventually collapse. Now more than ever, founders and business leaders of family managed businesses must move with extraordinary speed while navigating this disruptive and unfolding crisis never before experienced in our lifetimes. While the long term outlook is still uncertain, family members must now confront a unique set of challenges while demonstrating grace under pressure by making tough and painful decisions. It is now becoming clear that organizations must recognize the need to preserve cash on one hand and maintain a work force and secure talent on the other hand.

Since the crisis began three months ago, we often hear that business continuity planning (BCP) is critically important in putting the right infrastructure and metrics in the organization in order to steer the same from harm’s way. But how can a small and mid-sized family business owner possibly apply BCP to his or her organization? What is the real benefit of BCP in a business that is on the verge of collapse? In this article, I will share my most recent experience as board advisor with a mandate to set up a real working board, comprising family and non-family members, engage functional advisors, provide guidance in the implementation of the BCP and challenge family members to formulate several post covid-19 turnaround scenarios while encouraging the family to stay committed and united…all in less than two months.

 

Urgent intervention

In hindsight, the family was not able to deal with the crisis, even when they saw it gathering speed. The impact was sudden and it was government, economic and health considerations all rolled into one that prevented decisive action. The consequences were devastating and fueled a state of panic. Communication was key to preserve harmony within the family and my role was to regularly preside online board meetings. What was at stake during the initial meetings was the need for the leadership team to come to an agreement by way of an alignment strategy. No doubt, it was difficult as it involved a delicate balancing act between preserving cash flow and workforce reduction. Decisions went back and forth but when we started reinforcing it with objectivity and information, family members in the board became less emotional and went ahead with making those critical decisions. After the alignment plan was approved, the immediate challenges were clear- firm up a working board so the directors can plan. It was an impossible mandate to recruit independent directors due to the lockdown but thankfully the board ended up with a good interim advisory team ready to help.

 

Accepting reality can be tough

It was obvious that the lockdown became a deepened threat that spurred the company and the leader into action. In my years advising organizations, this attitude is very common for privately held companies where there is no public accountability. The principal reason for this blindness centers on the leader’s ego. An entrepreneur who started from nothing and went on to create something often cannot accept the reality that it is time to seek help from other people. This attitude is normally associated with pride, the foolish type and is often referred to as hubris. After overcoming the natural resistance from the head of the family, we went full steam ahead. He realized we were there to save his business. With the entry of advisors with expertise covering finance, human resource and operations and after a series of zoom meetings, the team prepared the critical “must do lists” to mitigate the impact of the crisis and the uncertainty that came with it.

 

I will be sharing the hurdles and mitigating strategies proposed by my team of advisors in a free webinar jointly organized by this paper, FutureSmart headed by a dear friend Jigs Latoza and Wong+Bernstein Advisory. It will be on Saturday at 1030 am and moderated by Lcid Fernandez. I encourage business owners to participate as this advocacy may be the most important learning event you will ever attend in a crisis that has shocked and overwhelmed all of us.