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Philippines: 20% of businesses won’t survive pandemic
20% percent of businesses will not likely survive the Covid-19 pandemic, a professor from the Asian Institute of Management (AIM) said.
AIM Professor Rene Domingo during the recent “How businesses can recover and thrive during the crisis” said that businesses that won’t survive the pandemic crisis regardless of what they do and the amount of dole-outs they get are those that “are totally unneeded under the new normal.”
“These businesses have [also] underlying weaknesses like high fixed costs, weak management, and a core business compromised and permanently damaged by the crisis. Divesting is the only way our for this group,” he said.
Domingo said that 20 percent of businesses, on the other hand, will survive and thrive regardless of the outcome of the crisis.
“These companies are well-managed, future-proofed, doing essential products or products that continue to be relevant and needed in the new normal. They need not turnaround nor pivot,” he said.
Domingo said the two groups are part of what he called “triaging” of troubled businesses.
He noted that since government and businesses have very few resources, “we have to know who to help and not to help.”
Domingo said the first two groups are those that should not be helped, adding that the remaining 60 percent should be the priority.
“Who are these in the gray area? These are the industries that need to pivot. They still have a chance and time,” he said.
Domingo said the remaining 60 percent in limbo will have to turn around and pivot or else suffer the fate of the bottom 20 percent.
“But the new industry leaders and pioneers of the new normal economy can rise from this group if they execute a brilliant pivot strategy,” said Domingo.
According to Domingo, no business or industry is too big to fail during the pandemic.
“No amount of government subsidy or cost cutting can save business made irrelevant by this crisis. Not all businesses and industries will recover when the economy recovers,” he said.
Domingo said during this pandemic, businesses must make sure that they have enough cash or liquidity of expenditures; assure key customers that they will be back when things normalize; take good care of staff and their families; and ensure that key suppliers are ready to restart serving them again.
Source: https://www.manilatimes.net/2021/08/27/business/top-business/20-of-businesses-wont-survive-pandemic/1812509