How to reemerge on the difficult road to the new normal. NOTA EL CRONISTA

Versión en español

Don Juan has run a successful business for more than 20 years, an eating place specialized in choripan on Route 9 on the way to Rosario with seven employees and more than 200 clients who enjoyed his grilled food every day. His clients, mainly truck drivers, never missed it and usually gathered and had lunch there.

Article by Julián A. de Diego published in El Cronista on July 21, 2020

Don Juan has run a successful business for more than 20 years, an eating place specialized in choripan on Route 9 on the way to Rosario with seven employees and more than 200 clients who enjoyed his grilled food every day. His clients, mainly truck drivers, never missed it and usually gathered and had lunch there.

He had a son, an excellent student with high grades at university, who never worked at the restaurant. Don Juan wanted to reward him and paid for an MBA at Harvard University where he graduated with honors.

When he came back with the Covid-19 Pandemic in full swing, he gave his father a detailed report with many arguments stating that in this context he’d rather let go and shut down for good. In the meantime his son ran for a big position at the Ministry of Economy, got elected finally and nobody knows what became of him.

Don Juan followed his instinct and kept his working capital, protected his employees, refurbished his eatery on the highway, and with prevention protocols, social distancing, and any other available means to avoid infection, he prepared hot food containers for take away, reopened and resulted in enormous success, even more successful than before the Pandemic.

How successful you are is not unrelated to what you do. This adapted introduction to the days we are living comes from one of the unforgettable talks I’ve had with Juan Carlos de Pablo.

How and when the pre-Pandemic stage developed, how the strategy to handle the Covid-19 crisis was designed, and how the reemergence strategy is outlined, have been and still are crucial to reactivate hibernated businesses and resume growth.

Even though the truth is that we should never forget where we come from, the return to a totally different world as we know it before the Covid-19 outbreak as well as our ability to adapt is vital for the survival of private companies.

There are more than 1 million new unemployed workers confirmed; the poverty rate is 50% or over; more than 1.5 million job positions have been cut at SMEs and it is still unknown whether they will return to work (companies with fewer than 100 workers); a third of chain stores shops have already closed and will not reopen; 50% of shopping center stores and business centers have been unrented or leases have been cancelled; and one out of three employees does not know what their future employment will be.

In this context, there are companies, organizations, working groups, entrepreneurs and sea dogs who are growing, taking full advantage of the niches that create more demand of services, work, creativity and innovation.

For example, MercadoLibre has strengthened its business and created new products and alternative services, becoming one of the biggest companies. And there is the unprecedented success of door-to-door delivery service offered by companies such as Rappi, Glovo or PedidosYa.

Leaving aside those who have grown during the Pandemic, now the challenge lies ahead for industries that have been paralyzed due to the Covid-19 outbreak, whatever their size, who failed to see the signs of a paradigm shift and will prove unsuccessful as compared to others in the same sector who carefully understand how clients’ needs and preferences are changing. Take for instance, tourism, restaurants, stores in general, and in particular shoes, clothing, luxury items and durable goods.

We all know that there are two worlds that will not change: the State at the national, provincial and municipal levels, and the universe of government subsidies and welfare programs. In fact, there are 32 million people who live on what 12 million people produce. By and large, the moral misery of politics has caused economic misery. In essence, the two main factors that do not create wealth and cause a systematic increase in public spending will continue to be a heavy burden that will inevitably destroy work ethic if the world of government subsidies continues to expand.

What the near future will bring? Companies will clearly need:

a) AFIP and ANSeS debt restructuring and extended deadlines when they have complied with easy payment plans, installments and deferred payments;

b) Emergency Aid Program for Employment and Production, and continued payment of 50% wages with the existing maximum and minimum amounts or similar or improved versions;

c) Nonpayment of employers’ contributions as financial aid for companies in critical situation and with large staffing;

d) Zero-interest loans and relatively long grace periods as a contribution to the relaunch of capital;

e) Extended deadlines for tax and social security obligations until companies achieve a certain level of their usual invoicing;

f) Reformulation of the integral labor cost to improve competitiveness;

g) A tax and labor substantive reform to be put forward by the Executive at its own initiative, and debated at Congress;

h) Crisis Collective Bargaining Agreements to relaunch companies’ full business

i) And finally, bank loan restructuring

We will most certainly need good luck. Quote from Seneca: “Luck is what happens when preparation meets opportunity”. Within a framework of solidarity, humbleness, empathy, leadership with integrity, strength to face adversity, individual and collective awareness, what we need is skills, good judgment and commitment to reemerge in a NEW NORMAL.

 

Por Julián A. de Diego
Por Julián A. de Diego

Fundador y Titular del estudio “de Diego & Asociados”. Abogado, Doctor en Ciencias Jurídicas.