The year 2022 has so far had a rocky start, with the new year seemingly introducing new trials just as business owners and corporate leaders were getting steady on their feet in the “post-pandemic” climate. Including the recent surge, the total number of COVID-19 positive cases in the country has reached the 3 million mark. As a result, the government has placed more areas under Alert Level 3 classification, thereby placing operating capacity restrictions on more businesses across the country.
Furthermore, we now have a clearer picture of the damage created by Typhoon Odette back in December. With an estimated total of P28 billion worth of damages to agriculture and infrastructure across the affected regions, it will take a while for businesses in that area to bounce back. Economists have also noted that the aftermath of the storm could slow the country’s overall growth, lowering fourth quarter gross domestic product (GDP) growth expectations to a maximum of 6 percent, two percentage points lower than the previous prediction of 8 percent.
In short, disasters are bad for business, and micro, small and medium enterprises (MSMEs) are often the most vulnerable to the resulting disruption. As it currently stands, MSMEs struggle against an inflationary period that threatens to heighten further in disaster-struck regions, as well as the risk of temporary business closure and/or the high cost to return to normal operations.
Support from both national agencies and local government units are as vital as ever to ramp up recovery initiatives for MSMEs, but here are a few ways in which business owners can help fast track the process and strengthen business resilience:
Look for alternative funding opportunities
It has been found that MSMEs commonly fund their post-disaster recovery out of pocket, relying on either remittance from OFW family members or loans from relatives and informal lenders. For businesses that are already strained on resources, sometimes MSMEs opt to stop operations entirely as they try to build back capital. Thus, funding opportunities from both the public and private sectors, or even extensions on due payments, offer much-needed relief to keep businesses afloat during this transitory period.
Referring specifically to Typhoon Odette and its affected MSMEs, the Department of Trade and Industry (DTI) has provided the following: a microlending program through the Small Business (SB) Corp., with an initial allocation of P200 million; the distribution of livelihood assistance kits worth P8,000 to P10,000 in Negros Oriental and Siargao as part of their ongoing Livelihood Seeding Program; and zero-interest loans for tourism projects through the Coronavirus Disease 2019 (COVID-19) Assistance to Restart Enterprises or CARES program. In addition, the Insurance Commission has directed insurance firms to process claims and disbursements for affected individuals at a faster pace.
Participate in programs designed for small businesses
Sustainability and environmental, social, and governance (ESG) goals are always top-of-mind concerns for big corporations, but the situation is a little different for MSMEs. Surveys have found that, even when MSMEs are interested to invest in measures that would strengthen their business against climate risk and disruption, they might encounter roadblocks when it comes to financing or arranging loan applications. Therefore, keeping abreast with cost management strategies, along with strengthening their general administrative and digital skills, can help business owners weather the worst of the losses brought about by disruption.
Through its partnerships with various business development service providers and training centers, the DTI offers the SME Roving Academy and the Kapatid Mentor Me Project as avenues for MSMEs to learn how to be more competitive in the market, among other training programs and seminars. Membership in organizations such as the Cebu Chamber of Commerce and Industry (CCCI) would also provide business owners with a range of seminars to choose from to learn more about internal controls and management strategies.
Additionally, noting the importance of digital transformation and e-commerce to businesses during the pandemic and in the current landscape, the DTI has also ramped up its SETUP 4.0 program which aims to utilize science and technology interventions to help MSMEs be more comfortable with having Big Tech in their daily business operations.
Create a culture of business resiliency
The actual on-the-ground impact and damage of disasters are difficult to predict, but owing to the country’s geography, one can presuppose that something like a storm or a blackout is a semi-frequent occurrence – therefore, it is possible to plan and try to mitigate its effect to a degree. The way that businesses can do this is by creating a flexible business continuity plan in case of disaster, familiarizing their staff members with that plan, and continuously building upon a culture of business resiliency.
Crises often require immediate action. As such, business continuity plans can provide a framework for high-level decisions in the middle of a disaster, along with conducting regular stress testing and disaster response simulations. But beyond that, a company’s day-to-day culture is one of the primary indicators for organizational resiliency. Liberating personnel to value and practice flexibility and leadership as part of company culture, for example, can ensure that each staff member can take the necessary steps to keep operations going even in the absence of management, such as in cases when communication and internet connectivity might be limited.
Loss is still inevitable in the face of a natural disaster, but at the very least, business owners can try to get ahead of the issue and adopt measures and policies that will allow them to build back faster and at significantly lower cost. In any case, the start of the new year may have been fraught with difficulty, but there is still a lot of time left before we can pronounce 2022 as a good or bad year for business. Let us all hope for better weather from this moment forth.
As published in The Manila Times, dated 19 January 2022