By Dr. Nirmal De Silva (Associate Professor in Business, Entrepreneur & Board Director)
Business News: Over the last few weeks, the author has been speaking to a number of small organization owners across Asia. It is very clear that small organizations will be impacted the most from an economic perspective due the pandemic. Even though it is premature to predict the magnitude of the impact, there is no doubt that every industry would be impacted. Experts are of the view that some organizations may take as long as 24 months to recover. The fear and uncertainty of the future is something that is in the mind of every business owner. Whilst some organizations are better prepared to deal with scenario others are visibly struggling indeed.
Mainstream and social media across the globe are sharing many examples of large organizations doing fantastic things to support their communities in the fight against Covid-19. It is inspiring to see that these large organizations are creating impact and going beyond their normal call of duty. The purpose of this article is to share 5 things that large organizations can do to help smaller organizations both during and post Covid-19 so that they can minimize the economic challenges and survive as a result.
- Re-evaluate the Credit Policy of the Organization: This can be done potentially in two ways. Firstly by changing the ‘payment terms’ to suppliers. If the current payment term to suppliers is 60 days, this can be changed to 30 days for example in particular to smaller organizations so that it helps their cash flow. Similarly in B2B cases large organizations can support their customers (smaller organizations) by giving them an extra credit period so that they can pay back later than usual which will assist in their financial position. The key aspect that large organizations need to keep in mind is that even though everyone is going to be impacted due to the pandemic the smaller organizations are going to be more vulnerable. Now is the time for organizations to be impact driven and support their communities and stakeholders more than ever. Larger organizations should also not try to exploit the situation for selfish or profit oriented objectives. This is myopic at best and suicidal to the brand image at worst. The reputational damage is irreversible. More importantly such behaviour raises ethical and moral considerations which should be non-negotiable from a governance perspective.
- Foster a Small Enterprise for a Period of Time: Large organizations can foster small organizations by providing them a variety of support mechanisms such as ‘soft loans’, paying utility bills, settling an outstanding lease, payment of office space rentals (or providing free space), ordering additional inventory or products and introducing new customers. Large organizations can ‘foster’ smaller organizations within their existing supply chains, customer segments or similar industries. Similarly they can support smaller organizations to ensure ‘Business Continuity’ by helping to replicate some best practices already adopted by them. If 200 large organizations for example can foster 2 such smaller organizations each for 3-6 months it will no doubt have a tremendous boost to the economy.
- Give Small Organizations a ‘Voice’- It is evident that organizations will have to re-examine their business models as a result of this pandemic. The new world that we will be embracing Post Covid-19 will be a different one with both challenges and opportunities. Larger organizations can support the smaller organizations by giving them a voice and a place in the board room. What this means is that large organizations should get feedback and ideas from smaller organizations who they deal with as part of the supply chain or value chain. This will enable innovative and out of the box thinking whilst protecting the interests of the smaller organizations. The key collaborate with each other and protect the industry as a whole. Similarly larger organizations can share consumer insights, research and other knowledge to smaller organizations so they are abreast of the changes in market dynamics.
- Re-allocating Corporate Social Responsibility (CSR) and Other Budgets: Large organizations can allocate some of its CSR budgets towards supporting small enterprises overcome the economic impacts of Covid-19. If only limited budgets are available, then they should consider cancelling annual events such as the Sports Day, Christmas Party, Top Performance Awards etc. so that money saved can be used to support smaller organizations in this hour of need. For organizations that commences its financial year in April, make sure that you allocate some budget for CSR activities and supporting smaller organizations. Tough economic conditions should not be an excuse to scrap such budgets and shy away from being a responsible entity. Larger organizations have a responsibility to lead from the front and ‘walk the talk’
- Lobby for the entire Industry and not just Yourself: Larger organizations by virtue of their size, contribution to the economy and networks have better relationships and lobbying capabilities with policy makers. During a pandemic of this nature, some large organizations are tempted to be concerned solely on their self-interest. On the other hand the small organizations usually do not get a platform or an opportunity to have a direct dialogue with the policy makers. They are at the receiving end whenever there is a crisis or economic downturn. Hence, one of the ways of how large organizations can support (smaller organizations) is by lobbying and negotiating on behalf of the entire industry. It has to be a genuine and committed effort and not just a ‘window dressing exercise’ to feel good or tick the box.
It can be argued that there are many other initiatives that large organizations can implement to support smaller organizations in particular during these times. In fact many organizations have already come up with some innovative ideas in different parts of the world. However, for the purpose of this article the author has narrowed the scope to only 5 areas which can be implemented in an expedited manner with the right mindset.
Well done to all the organizations who are already leading by example and are the first off the ‘starting blocks’. For the rest of the organizations the time is right to get in to the race after all it is the right thing to do and what is important is not just ‘starting this race but finishing it off’ as well !!
We need to be united in our endeavor in fighting this pandemic. Similarly we need to support each other during these tough times. Sri Lanka is a resilient nation. Now we have an opportunity to exemplify this once again.
Meanwhile stay safe everyone, be responsible, ensure social distancing and remember that prevention is always better than cure!!
TOGETHER WE CAN!!Over the last few weeks, the author has been speaking to a number of small organization owners across Asia. It is very clear that small organizations will be impacted the most from an economic perspective due the pandemic.