BOARD TALK | opinion

3 Ways to Prepare Your Business For Longevity

By Prof. Enrique M. Soriano
Published March 21, 2023

Never, never give up!

This was the original title to inspire business owners to do whatever it takes to

survive, but with the reopening of the economy and the now-dwindling impact of the COVID-19 pandemic, we are way past the goal of just surviving. After all, we're now in a more stable situation — or are we really? 

In the aftermath of the pandemic, just as many businesses are finding their rhythm yet again, we suddenly find ourselves on edge, standing on tiptoes as we brace for a potential impending economic depression. And while big companies may already have an idea of what to do next, many small business owners may still be in the dark — something I find concerning as these businesses are the very entities that suffered heavily back in 2020.

I can only hope that they have learned their lessons and are now revisiting their business models to recalibrate, transform, and future-proof them into one set up for longevity, regardless of the state of the local and global economy.

Taking into account the many years I have had as an Asian Family Business Advisor, three specific things come to my mind that entrepreneurs of today must look into and consider to aid them in becoming not only resilient but also adaptable, future-proof, and capable of weathering storms as they make landfall. 

Build structures and establish corporate governance

Time and again, in the many talks I have delivered and articles I have written, I have always made it a point to instill in business owners from all walks of life how vital business governance is, be it in a family or non-family setting, and even those that are relatively small. 

Business governance establishes the company's direction by setting rules, practices, and processes. And while it is often seen as a waste of time, effort, and resources from what's supposedly the main priority of the business, which is generating revenues by way of involvement in operations, it is in times of instability that governance is firmly required. Companies must have certain structures in place to help them govern themselves to lead the business better. Governance can assist in engaging, empowering, and utilizing each member's strengths and capabilities so that the business — family-run or not — can work together, effectively enduring whatever the future holds.

Make the right hire

One thing often impacted by economic shifts heavily is the workforce as changes in their preferences and the trends in the world of work become unpredictable, which is also the case in labor demand, the mix of occupations, and workforce skills that will be needed in the future. This is why if owners want to future-proof their business, they must hire the right talents to stay and work on the organization's success with them.

To do so, there are four pillars that owners must embrace. These are the technical skills, human relations skills, track record and the "cultural" fit of the candidate. Neglecting one pillar in the hiring process will likely lead to possible failure. The latter may be able to deliver based on measurable expectations, but if he or she fails to manage the impulsive nature of the owners, the tenure will likely be short-lived.

To truly capture the art of bringing in the right people for your enterprises, there are two ways: (1) building a fool-proof hiring strategy or (2) outsourcing recruitment and enlisting the help of headhunters. Both have pros, but as someone who's been through too many hiring scenarios both for the companies I handle and my clients' family firms, my confidence lies in headhunters or HR professionals working in executive search firms like Icon Executive Asia, which I have had the chance to work with multiple times. They tend to be more "holistic and proactive" than that of HR departments and recruitment agencies. They offer better assurance of linking companies with the right professionals and vice versa. 

Insure your business

Since the goal of any business is to continue to grow and thrive past crises and economic uncertainties, owners must have a strong financial foundation as well as a financial plan that will cover important assets with the right insurance products because, as explained by none other than Sun Life of Canada (Philippines), "Businesses can lose their footing, especially when there are no safeguards in place."

Ideally, contingency plans must be in place to define how to maintain cash flow as well as human resources, and this is where insurances come into play. There are many types of insurance that are tailored-fit for business owners, like personal financial planning, which is best for startup founders; key person protection, which uses life and critical illness insurance policies to safeguard and prepare a small business for the financial costs of losing a key executive or employee; the buy/sell insurance which helps ensure a smooth transition after the loss of a business partner or shareholder; and the estate protection, which allows for wealth preservation and a smooth transition of management and ownership to the next generation. See, insurances prove helpful as they secure not only the business and the owner but also the employees and investors. Therefore, seeking professional guidance to help you future-proof both your business and personal goals is a must for owners. 

To end this, as a family business advisor, my advice to entrepreneurs and business leaders is straightforward: Never give up even when the going gets tough and always come with a plan. Without one, a crisis can take the business out overnight, and mind you: it does not distinguish between big and small businesses.