Entrepreneurs between damage control and responsible leadership

Source: Trends magazine (19/03/2020)

Corona is a global problem. Drastic measures will lead to a global economic downturn, probably from the second quarter of 2020 onwards. Prospects range from a relatively rapid recovery, with our economy and society soon returning to its old rhythm, to a drastic recession on the other hand, due to a pandemic that we cannot control. In between, there are a lot of nuances in some form of a slowdown.

A survey amongst the members of the Impulse Centre ‘Growth Management for Medium-sized Enterprises’ (iGMO) at Vlerick Business School shows that Flemish entrepreneurs expect their budgeted profit to be cut in half and an average drop in turnover of between 10 and 20 percent in 2020. The entrepreneurs indicate that finding a balance between ensuring the short-term operation of their business on the one hand, and guaranteeing the long-term continuity of their company - and by extension the broader society - on the other hand, requires a lot from them.

SMEs are feeling the impact of the corona crisis at all levels, from staffing problems (maintaining enough healthy employees), through supply chain and production interruptions to cash flow issues. The latter is an often underexposed, acute problem where credit lines are better taken up too quickly rather than too late.

Prior to this crisis, only 15 percent of the companies had drawn up contingency plans to fall back on. Consequently, managing the day-to-day operation of the company often requires intuitive and reactive decisions, which are not necessarily optimal.

Courage and decisiveness

The problems mentioned also require a vision that looks beyond damage control. There is a need for responsible leadership in which - often forced - certain short-term goals, such as the budgeted turnover and profit figures for this financial year, are sacrificed for a social welfare goal and for the long-term health of the company. This balancing act puts entrepreneurs in a dispersed position.

This is a unique moment in our recent Belgian and European history, an opportunity to put our sense of citizenship above any individual impulse in a very radical way for a couple of months. Especially in challenging times, entrepreneurs, just like academics, have not only an individual but also a social responsibility and task. Neither panic nor resignation are needed, but courage and decisiveness. After all: the four keywords of entrepreneurship are daring, dreaming, doing and persevering. Entrepreneurs must keep their cool and their positivity. If they are real survivors, they have a task to accomplish in the war against corona and against the derailment of the panic that accompanies it. "Courage is knowing what not to fear and also what to fear", Plato already knew. The future of the employees, the families, the friends, the companies and the whole society are at stake.

Crises are challenging

A company's sense of purpose appears to be even more important than before because it provides an answer to the question ‘what social role does a company wish to play, even and especially in times of crisis’. Here it is crucial that you have a strong connection with your customers. SMEs are very vulnerable in these times. But crises are challenges and every crisis offers new opportunities. By linking a long-term vision to a decisive limitation of short-term damage, Flemish SMEs will after some time be virus-free and possibly emerge from this crisis healthier than before.

Hans Crijns (Professor of Entrepreneurship at Vlerick Business School), Yannick Dillen (lecturer at Vlerick Business School and Manager of iGMO), Daan De Wever (CEO of Destiny) and Herman Van de Velde (Chairman of Van de Velde NV).

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