The past couple of weeks have been quite a challenge for most of us here in the Philippines. The nonstop rains and the flooding they brought affected many activities, including some of our own meetings and events for the Philippines’ ASEAN chairship.
Now there’s really nothing much we can do about the weather. I think that ship has sailed. But I share with many Filipinos the frustration over how poorly we have performed in managing the natural calamities that regularly and frequently visit our archipelago.
The consequences have become more than an inconvenience (like more hours spent in traffic, postponed meetings, delivery delays, etc.); they are now beginning to have more long-lasting effects, and it could only get worse, given the alarming rate at which our weather disturbances are increasing in their ferocity and unpredictability.
Two of our upcoming events are directly addressing these concerns. One is the ASEAN Food Security and Agribusiness Summit this Aug. 20, and the other is the ASEAN Youth Entrepreneurship Summit in October. These two events address two sectors that will determine the future of our country: its food security and the next generation. With hope that the weather cooperates, we may yet be able to discuss the pressing issues that affect these two sectors, all with the lessons of the recent flooding that submerged households, schools, farmlands and major city roads.
One of my immediate concerns, however, was how the floods affected our MSMEs. Disruptions, whether because of natural disasters or bad business moves, can put a company’s ability to keep operating in serious doubt. When major natural events or human-made emergencies occur, they can destroy assets, disrupt suppliers and logistics and strain cash so severely that the business can no longer realistically continue.
According to the UNDP, MSMEs in developing countries like the Philippines usually take a bigger hit from natural disasters than larger companies. That’s mainly because they have fewer options when it comes to risk management, so they’re more exposed in the first place. On top of that, the Philippines’ frequent hazard exposure tends to cause major economic disruptions, and that slows overall development.
When disaster strikes, Philippine MSMEs often struggle harder to bounce back. Compared with bigger firms, smaller businesses typically have less money and fewer technical resources to prevent problems or deal with them quickly once they start.
There’s also an important “people and place” angle: MSMEs are tightly connected to their communities because they provide jobs and help keep local economies moving. So when communities recover slowly, MSMEs feel it even more – and in many cases, their own continuity depends on the recovery of the area around them.
MSMEs can implement something called a “business continuity plan,” in which you first identify critical areas in the business and assets that are at risk. Risk here is not confined only to geographic hazards, but also sector hazards. High-contact businesses, for example, become more vulnerable when public health restrictions are in place, as we experienced during the COVID emergency.
Then comes an assessment of potential risks (calamities are just one, but what about disruptions in the supply chain, like if the supply of plastic straws comes to a halt and affects the milk tea shop?). And then setting up alternative work arrangements, which include safety protocols for staff.
The risk exists in several aspects of the business, so business owners can plan accordingly. These include: how to manage employees, how to handle both suppliers and customers and how to manage the flow of information both within and outside the business.
You have to have a plan to prevent or minimize risks for all the people involved in your business. Will your delivery boy be able to safely traverse the roads in the event of flooding? I remember that during the COVID pandemic, motorcycle riders had to install special barriers to protect them against infections – maybe a poor example now, but you get what I mean.
And in case that disruption can’t be prevented, then you move on to mitigation. How do you reduce the impact of the disruption? What alternative arrangements can be made so that business can go on with minimal losses? Do you have enough liquidity (cash, or assets you can easily turn into cash) to serve as a buffer in case your business is not covered by insurance?
To protect your small business when disruption happens, start by noticing the kinds of problems that can realistically affect you. Think about everyday risks such as bad weather, power cuts, unreliable internet service, supplier delays, staff illness or sudden changes like road closures or a transport strike.
Next, take a moment to understand what these disruptions would impact the most. If sales slow, deliveries slip or customers can’t reach you, identify which parts of your business would be hit first. Will it be your cash flow? Your ability to take orders and serve customers? Maybe your timeline for completing a project? Then decide who in the staff handles what when things go wrong. Even if you’re a one-person operation, you can name responsibilities for yourself and, if possible, for a trusted backup who can step in to contact suppliers, respond to customers, manage payments and keep day-to-day operations moving.
Having examined options, write a clear “what to do next” set of instructions so you can act quickly instead of improvising during stress, including simple steps to keep core services going or to recover fast when something breaks.
Finally, practice the plan by running brief simulations or scenario checks regularly, then adjust it based on what you discover so it stays useful the next time disruption occurs.
In accounting, the “going concern” principle assumes that a business is stable enough to continue operating. With the growing concern about climate change – weather-related and otherwise – we can only hope our MSMEs remain going concerns.