In the aftermath of the pandemic, businesses and individuals alike are scrambling for solutions to the many problems of the present. Some have done better than others. A mortgage broker, for instance, won’t have trouble finding buyers given the high demand for the real estate market.
But most businesses have had to retool. They have had to furlough workers, with no firm timetable yet for a return to normal operations. Many people have successfully transitioned to remote work but now realize the downsides and challenges of working in this alternative office environment. And doing well today isn’t a guarantee of future success.
The signs indicate that we’re in a recession like no other. The government and other leading institutions have responded swiftly; short-term assistance has softened the blow. But we are likely to feel the real impact of this recession in the long term. What might serve as a guiding principle to oversee the future survival and success of your business?
Lessons in survival
Many people have this perception that giant corporations are too big to fail. We see this in the rise of stock prices when a merger or acquisition is completed, and also in the shock at sudden collapse or dissolution. But while the most prominent companies routinely dominate the headlines and the popular imagination, it’s often small family businesses that know how to withstand the test of time.
Henokiens is an example of this ability to survive. Its current membership of 47 is exclusively comprised of family-owned businesses in continuous operation for at least 200 years. Japanese ‘shinise’ businesses are another outstanding example; the country has over 33,000 firms aged 100 years or more.
All of these businesses have withstood periods of conflict, upheaval, and uncertainty. Many of them were arguably more complicated than our current situation with Covid-19. They survived revolutions, world wars, the Great Depression, and even the most similar previous pandemic, the 1918 Spanish flu outbreak.
What are the qualities that distinguish these companies? There are several attributes they have in common. They prioritize long-term decision-making over maximizing short-term profits. They are consistently dedicated to sustainability and excellent customer service. And they remain faithful to their core competencies.
Defining your business as a legacy
Above all, though, these family-run businesses are treated as something greater; they are legacies. Starting and running a business with your own goals in mind will result in a different approach compared to someone who wants to pass on the company to their descendants.
There’s always a risk when you try to borrow from something that has proven successful in a different setting. In this instance, family businesses from another country. However, the underlying principle is arguably not dependent on context. Rather, it’s something far more universal; what author Nassim Nicholas Taleb calls ‘skin in the game.’
When you have skin in the game, you are taking on a personal risk based on the outcomes of your efforts. And indeed, all entrepreneurs do that simply by running a business. But when you view your business as a legacy, your skin in the game extends far into the future. It changes the context of your decision-making.
You’ll have to re-evaluate every move that seems to make sense in the present because it might not make sense for your successors. Short-term gains no longer seem so attractive. But adopting this sort of outlook makes you more visionary. It can lead to insights that will only make sense in the future.
True sustainability comes first
When people think of sustainability, they invariably associate it with the environment. Businesses might think of measures such as saving energy, reducing fuel emissions, or environmentally-friendly packaging. But those are merely facets of the whole.
The concept of operating sustainably is put into its proper perspective when you treat your business as a legacy. Growth and scale are no longer universally good things; they might be good for short-term business profits but bad for everyone in the long run. More than ever, you’ll have to consider whether it’s possible to overreach; if markets are nearing saturation, if today’s trends are nearing (or past) their inflection point.
Pushing beyond sustainability is why so many businesses have been thrown into disarray by the pandemic. They relied on the assumption that the status quo of previous years would extend indefinitely into the future, despite all sustainability indicators showing otherwise.
Will your business model and concept still work ten or twenty years from now? Are you prepared to make not only the changes that will enable survival in the present but the long term as well? The idea of scaling back and limiting your focus to your core competencies might not be pleasant. But it could be the only way to pass on your business as a thriving legacy.