How to protect your SME from shocks and crises?
June 2023 – Any crisis can be the crisis too much for an SME. So it seems anyway. What can you do to protect your business from unexpected events such as the war in Ukraine, terrorist attacks in Brussels or the global health crisis?
How shockproof is your business?
Economic and financial shocks are part of (business) life. On top of the natural swell of boom and bust, entrepreneurs have to deal with unexpected shocks, which often affect an entire sector or a geographical region.
Shocks are inevitable by definition, but companies can prepare for them. Eric Van den Broele (head of R&D Graydon Creditsafe) advocates that SMEs try to build up so-called 'redundant reserves' in financially secure times. These are financial surpluses to cope with unexpected events. In other words, they ensure the continuity of the company in difficult times, without having to resort to additional funding or government support.
What can we learn from economic crises?
Over the past 30 years, we have solved every crisis by mortgaging our children and grandchildren, as well as the ecosystems of their future, argues Van den Broele. Recent (economic) crises and shocks clearly show where the economic dynamics of the past 30 years have gone wrong. We need to move away from short-term thinking and quick profits, in favour of long-term sustainability, and cooperation within ecosystems.
Investing in sustainability
Crises and shocks are the time to invest in sustainability, Van den Broele argues. 2023 should be the year of ESG: Environment, Social, Government. Because investing in sustainability strengthens the autonomy and creativity of companies and leads to long-term partnerships, making them better armed against shocks.
