By Lara Pickford-Gordon
How can a business continue after losing months of downtime, carrying sizeable debt, and losing customers because of the effects of the COVID-19 pandemic?
“Depends on the business. There are usually several options, but the business has to be brave and imaginative at a time when fear and safety are dominant features in the business mindset,” said Dr Rolph Balgobin of The Corporate Turnaround Company (turnaroundtt.com).
Around for more than 20 years, he observed, “The need for turnaround guidance is always amplified in a recession”. Balgobin has extensive experience in the business field and is a former president of the T&T Manufacturers’ Association and independent senator.
The company is offering free consultancy to small and medium enterprises (SMEs). This includes working with owners to assess the state of their businesses, advising on operational plans, recovery strategies and ideas for growth after COVID-19.
Solutions are developed “case by case”. Balgobin however said there are key things which are examined, “revenues, and how to grow or defend them; costs, and how to reduce or eliminate them, and the structure of the balance sheet and the size and structure of the debt”. The focus is, “how to change these two things to the advantage of the business.”
A small business has six to 25 employees, assets of TT$250,000 to $1.5M and annual sales of $250,0000–$5M; a medium enterprises has 25–50 employees, assets of TT$1.5M–$5M, and annual sales of $5M–$10M (source: Ministry of Labour and Small and Medium Enterprise Development Report of the Cabinet Appointed Task Force on Small and Medium Enterprise Development, June 1995).
SMEs will be informed about due diligence and governance system design, social enterprise development— using business logics to solve social problems, etc. Not all SMEs have established systems as they would have grown organically.
“Usually that’s the case. SMEs don’t usually have perfect vision of what their options are, and banks and creditors don’t usually tell you about the concessions they give to larger companies,” Balgobin said.
The challenges facing Micro, Small and Medium Enterprises (MSMEs) and SMEs are varied: cost of finance, limited access to capital, lack of access to suitable training and knowledge on how to start-up and sustain a new business, inadequate knowledge of financial management system.
Development of the MSME sector has the potential to generate greater employment opportunities for the vulnerable groups in society, women, and the youth (‘Developing the msme sector: A little goes a long way!!’ https://bit.ly/2XcWje8).
Data cited in 2008 from a Central Bank and Inter-American Development Bank report estimated there were 18,000 MSMEs, employing about 200,000 workers and contributing around 28 per cent of GDP. https://www.bis.org/review/r081210c.pdf
Consumers are expected to be cautious during the uncertainties with COVID-19, so how do some small and medium enterprises compete against larger businesses?
Balgobin said, “That is going to be incredibly hard to do, and they must innovate aggressively to stay alive. By aggressively we mean that the SME must put an almost superhuman level of effort into pushing their business forward.”
The environment is different now and he added that “both effort and innovative thinking are required” because what was successful two months ago may not work two months from now.
The company typically works with an SME for six to 12 months. Taking on a client is a commitment. The level of support will be based on an assessment of risk the business is facing. Balgobin said, “We will be doing our best to ensure that everyone who wants or needs help will get it.”
He stressed that the service is free because it is seeking to help others to “feed others”. Balgobin explained, “to maintain the dignity of human life by preserving the opportunity to earn, consistent with Catholic social teaching. We don’t feel that anything needs to be in it for us in order to extend a hand to others”.
He is aware of the pressure businesses face to survive. “The people that use us are mortally terrified of losing everything and will cling to any hand that is offered. The problem is, no hands are offered, and silent desperation gives way to despair, depression, then business failure.”
Balgobin said SME owners suffer silently and endure the shame and indignity associated with among other things, bank foreclosures and loss of homes. Engaging a consultant to advise them may be the last thing on their minds.
“In their wildest dreams they wouldn’t think that one would offer to stand by them for nothing. So, in our experience they are more likely to say, ‘Praise God!’ and that’s what we want; living demonstrations of the Catholic ethos,” said Balgobin.