Research suggests that small businesses that have experienced crisis in the past are evidently more concerned about crisis events than those that have not experienced crisis (Spillan and Hough, 2003; Mikusova, 2011; Herbane, 2013). Most SMEs typically do not start crisis management planning until after an actual catastrophic experience.
Economic policy measures in small open economies like Guyana are often limited. Since the future within the context of a dynamic business environment is very uncertain, and further deterioration of economic conditions is expected, economic policies must focus on at least three basic areas:
1. Reduction of uncertainty in the business environment. Much of this in Guyana’s context has to do with the inherent intricacies of the political economy
2. Strengthening the basic social network. And
3. Preservation of future fiscal power (Bole, 2009).
In every crisis, the labour market is affected the most. Therefore, one of the most important policy challenges is how to design and implement measures that are socially sensitive and economically effective at the same time.
The creation of more resilient SMEs
In order for SMEs to respond better to crises, they need to recognize that the risk is present, and they must do something about it. In fact, not only should SMEs be proactive, but promoting resilience is key.
Secondly, SMEs have to be realistic as to what they can plan for and what is likely possible post-crisis. Researchers contend that in situations where there is extensive crisis experience, those seeking to respond invariably confront unforeseen situations. It is important for SMEs, when planning for crises, to be mindful that ‘unexpected’ means that their plan might not be realizable, and evaluate what they consider as crucial for the survival of the enterprise after a disaster.
Thirdly, SMEs should conduct a risk assessment to assess the potential impacts of various events on all levels. For example, they should assess the vulnerabilities of an infrastructure towards different types of events, different locations, or different activities.
Fourth, SMEs should not underestimate the importance of the people factor. The reality is such that all employees may not be available after a crisis, and therefore it cannot be predicted how employees would react in stressful situations (Dahlberg & Guay, 2015).
Developing a model for crisis strategic planning
Organizations wanting to perform well at crisis strategic planning must do the following:
* Be pre-planned, and yet fluid enough to adapt to changing circumstances.
* Have leaders who are able to inspire their people with a sense of hope and direction while also being grounded with realism about the situation they are faced with.
* Have an organizational culture that values disciplined planning, whilst fostering an ability to be creative and innovative.
* Plan, and make decisions carefully and in a structured way; yet be responsive and able to move quickly and boldly.
* Have teams that are able to recognize patterns and integrate disparate information in order to make sense of chaotic situations, while being sensitive and alert to subtle changes to the environment as the situation evolves.
Crises often present a nexus of significant risks together with substantial opportunities. These factors, however, are typically not managed by a single coherent set of processes, but rather by two separate disciplines: crisis management and strategic planning. As such, effective crisis strategic management and planning; that is, the process of surviving the crisis while finding the silver lining, involves four key enablers: leadership, culture, decision making and situation awareness. These four enablers must be viewed from the perspective of duality involving planning and adaptiveness (Vargo & Seville, 2011).
Researchers further suggest that effective crisis management of SMEs involve proactive business mindsets for sustainable growth and continuous expansions (Hong & Li, 2012).
There is need for creative solutions to administer financial support for SMEs in the case of Guyana’s COVID-19 response. This author has, in previous articles, written on the likely economic impacts of a prolonged crisis period brought on by COVID-19 and compounded by the political impasse.
It has now become necessary to brainstorm creative solutions to support SMEs and the impact on the labour market, to avert a severe social and humanitarian crisis. To this end, the Bankers Association, through collaborative efforts with the Small Business Bureau (SBB), the central bank, Ministry of Finance and the Ministry of Business, can consider the establishment of a $10 billion fund for these purposes. The banking sector has well over $150 billion liquid assets that can be used therein. However, stringent conditionalities ought to be put in place, backed by Government support; inter alia, Government guaranteeing of the Fund.
The SBB, for example, operates a US$5 million Revolving Fund administered through the commercial banks.
This fund, therefore, can be re-calibrated towards supporting measures to keep SMEs as going concerns throughout this COVID-19 period, and to keep employees on their payroll. Other unemployment support for persons directly affected by COVID-19 responses can also be administered through the National Insurance Scheme. In fact, the governing structing of this fund should include the NIS, SBB, Bankers Association, Bank of Guyana, Ministry of Finance and Ministry of Business.
More thoughts to come next week on how this can work.
