A second look
By Atty. Antonio P. Pekas
Pending the picking up of demand to spur businesses, there is still a long way from here to there, or from now until it finally happens.
Meantime, can your business or source of livelihood survive, or should the bitter truth be admitted—that it won’t, that it would be best to close it down, call it quits. That it was good while it lasted. Find and start a new one, and hopefully there will be a niche for it in the new normal.
There is another option. To take a second look and find a way to weather the storm, and hopefully emerge at the other end of the tunnel stronger and more resilient to face any difficulty that will again arise in the future.
Those who take this course are confident there is a need (and there will still be in the future) for the products or services that one’s business offers. Once that is settled, then identify the measures to implement in order to survive in the interim of low demand. First thing that would have to be found will be the answer to the question, “How to reduce costs?”
A very big cost center that is often the priority to be trimmed is labor. Employees will have to be reduced. Laying-off is now the buzz word everywhere. For instance, Victory Liner, the biggest bus company in Luzon with thousands of employees has already started letting go of hundreds of employees. In a month or two, it would have let go of about one-half, or more than a thousand, of its employees. It would be bloody but it is the only way to stop the bleeding-to-death of the firm.
Thousands of families would go hungry. Their kids– the innocent collateral damage– might have to stop going to school.
Then comes the question on what to do with its assets. Selling them is the easy answer, but in times of difficulties or economic slowdown, there might be no takers. It will be a huge buyer’s market out there. Everybody would be selling but not many buyers, or even none at all.
What will it do with machineries that no one wants to buy? Try to mothball them and hope they will still be useful after some years? But even that can be costly. Same thing with trying to revive them after sometime.
As one top gun in a behemoth of an oil company said, an oil well that is mothballed would be so expensive to revive. It is not like switching it on and then you could say, “Let there be light, and there was light.”
Companies would have to concentrate on their core businesses which entail closing down peripheral ones. Again, families would go hungry. Yes, that is another buzz word, “closing-down.” Painful it might be but some customers or markets would have to be let go also. Some of these might have been nurtured through the years or decades. Some of them might have been the company’s bread and butter for a long time. (As of this writing, the gov’t’s official statement is that more than 3,000 businesses closed down during the lockdown. The actual number might be a lot more.)
New sources of revenue should be found but, easier said than done. Such might even be non-existent during economic difficulties, unless a new venture is hatched which can be suicidal. Here you are trying to trim down and then the prospect of a new venture floats in your mind?
Another aspect of a business to be looked at are overhead costs. Trimming these down to the barest minimum should be the order of the day.
The point is, there are so many aspects of a firm that need a second look for it to be able to weather the storm.**