Entrepreneurship & Coronavirus

Entrepreneurship & Coronavirus

by Otavio Dias, partner and CEO of REPENSE

MAI | 2020

by Otavio Dias, partner and CEO of REPENSE

Being an entrepreneur means knowing how to live with anxiety, because we all have ups and downs, good years, great years, but also bad years. Especially in times of crisis, it is not enough to have "entrepreneurial acumen" or "excellent academic training", it is necessary to have emotional balance and a great capacity for action, reaction and adaptation.

In Brazil, we are already used to the roller coaster we live in. High tax burdens, heavy labor charges and recurring political and economic instability. We have lived this reality for decades and it will hardly be different from now on.

For this reason, it is also important that we walk as independently as possible from the government. Could the conditions be better? Of course! But they are as they have been for a long time, and for this reason, we need to develop our business in parallel with the government's shortcomings.

Even aware of this, the truth is that we, the entrepreneurs, entered the current government with many doubts, but with the perception that "in the economy", in particular, we would have a significant improvement. And, in fact, in this first year we even saw a light at the end of the tunnel.

The government articulated and approved the Social Security reform, one of the country's imbroglios for years. Even "dehydrated" by the Congress, leaving a smaller economy than expected, this was the great victory of the year for the federal administration, along with the approval of the Lei da Liberdade Econômica (Economic Freedom Act), which reduces bureaucracy in the development of economic activities, especially in micro and small businesses.

The reduction in unemployment - comparing the first quarter of 2020 with that of 2019 - was small, but it existed (11.2% x 12%). In addition, the government moved closer to the United States, Israel, China and the European Union, trying to attract international investments, hampered by the constant political instability and “controversial” statements that had bad repercussions (and still have) internationally.

We still have tax and administrative reforms ahead of us, but it is undeniable that we had victories that brought some hope to entrepreneurs.

We seemed to be evolving, but 2020 has already started turbulent. Motivated by internal and external factors, the dollar's rise in the first quarter of the year scared the financial market and, at the beginning of March, we were all frustrated with the news of the insignificant growth of only 1.1% of GDP in 2019, after all, on January 1, estimates by consultancies and financial institutions showed an increase of 2.53%.

A few days after that news, the Coronavirus appeared and quickly spread throughout the planet and, as soon as it was considered a Pandemic by the World Health Organization (WHO), it strongly impacted all global markets.

In Brazil, the dollar increased to more than R$ 5.00 and caused a huge impact on Ibovespa, B3's main index, with the biggest drop among similar indicators of the main stock exchanges in the world in 2020. Its retraction reached 42% (3/20) and companies listed on the São Paulo stock exchange lost R$ 1.746 trillion in market value in the period.

Despite some opinions against quarantine and the mandatory closing of many businesses, the measures have become inevitable for most companies and are likely to last at least for a few weeks or months.

Moreover, you do not need to understand a lot about finance to know that for small and medium-sized businesses, such as stores, bars, restaurants, nightclubs (just to name a few examples), a fortnight without making money can represent the breakdown of the business, because in categories like these, the working capital comes from the revenue of the immediately previous fortnight.

For the informal economy, the impact is even greater. Street vendors, beauty consultants, nail technicians, hairdressers, housecleaners, among many other professionals who live off the day-to-day income, suddenly had to stop their activities altogether.

Without many small and medium-sized businesses and without the informal economy moving, there are less means of payment and, thus, a whole - interdependent - chain of businesses is affected. This same logic applies to many sectors.

This crisis will affect companies in all segments, after all, in addition to the country's internal challenges; we are also shaken by the crisis in the countries with which we have a close relationship and commercial dependence. Economists worldwide are already predicting a recession in the coming months or years. And, once again, we, entrepreneurs, have to be strong not to be discourage, lose heart, get depressed or give up on our business.

Despite the anxiety this moment brings, it is essential to remain calm, strictly follow the recommendations of WHO and the Ministry of Health (preserving lives first) and also have some optimism and a lot of  dedication, replacing the feeling of complaint and regret for  action and innovation;  rethinking the future of our business with pragmatism and agility.

If the technological boom of the last few years had already demanded a complete reinvention of business, Coronavirus has given yet another push to entrepreneurs in all sectors: remote work, e-commerce, delivery, digital media, new applications, reassessment of the way of work, adjustments in the workload, are some examples of changes that can be prioritized. The truth is that we can (and should) always rethink ourselves, but it takes courage and openness to the new.

As entrepreneurs, we will do everything in our power to maintain our business and thus continue to support the chain of customers, partners, suppliers and employees, who help us produce and generate revenue and profitability for the business - and also income for their homes. We also need to be aware of the seriousness of what we are experiencing, bringing flexibility and creativity to our businesses and empathy and compassion to understand, support and comfort the pain of those around us.

Unlike the global crisis of 2008, in the current crisis the vast majority of governments are giving greater support to the economy, injecting money and implementing various support and subsidy measures for companies. In the United States, the Senate has passed a bill that grants billions of dollars to limit the damage of the coronavirus pandemic through free trials, paid sick leave and increased spending on the safety net. In Brazil, the government has already announced flexibility in several points of the Labor Laws.

It is essential that we monitor these measures so that we do not fail to take advantage of them. However, on the other hand, pragmatism is needed to avoid overestimating this support because, unfortunately, our background in Brazil is not the best.

In my business, our motto at this time has been maximum proactivity with customers. We will spare no effort to be a close and strategic partner that will help them find the best strategic paths for the communication of their brands, as well as the most sensible tactical solutions that make each approved idea viable. Fortunately, we have very good relationships with customers and an engaged team that is dedicating themselves wholeheartedly to get through this moment, making a difference for our customers' business.

To entrepreneurial readers like me, I suggest that they exchange experience with other entrepreneurs and take advantage of this moment to listen more and carefully: their team, their customers, their partners and even their competitors.

Do not forget that many transformations and innovations that we enjoy today in our companies and in our personal lives arose in times of war or crisis too. Maybe the time has come for you to make the changes that your business has already been asking for.

This too shall pass. But the world will most likely not be the same after the Coronavirus crisis. May we have greatness and humility to learn everything we have to learn, preparing for a new cycle of growth, maturity and greater awareness of our teams, companies and, especially, ourselves.

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