Small business: those who reinvent themselves come out on top

An interview with Maurizio Camillo Borra for La Repubblica’s A&F, from 14/09/2020
Author: Sibilla di Palma

The economic impacts of the Coronavirus epidemic have pushed many SMEs into serious crisis or even forced them to close down.

This is a period in which to take action and strategic decisions: form reinventing the business model to generational handover, for those yet to take this step.

This is the strong belief of Maurizio Borra, founder of Legal Firm BBCZ Associates, which has recently launched a new service, called “FUTURE BUSINESS”. This supports SMEs in facing the critical challenges in the wake of Covid-19.

Generational handover

The crisis caused by the spread of the virus do not impact all sectors equally. “Some, such as biotech and cybersecurity, experienced no problems and are going through a positive phase”, observes Mr Borra, “while others, such as tourism, are in a highly difficult situation linked above all to a lack of generational handover”.

Just consider, he adds, that “in the Veneto region, where our operations are focused, 35% of companies continue to be guided by a generation of outstanding businesspeople, but they are over the age of eighty”.

This is an issue that has always affected Italian SMEs, with just 30% of businesses surviving passage from the first to the second generation, 12% from the second to the third and just 4% from the third to the fourth, and this has been highlighted dramatically by the pandemic.

The virus primarily hit the older generation, opening the eyes of many to the need to manage the process of generational handover well ahead of time.

It must be said, however, that often the second generation is revealed to be unfit to take over. In this case, if the company is not facing a crisis, the decision may be taken to sell or to reach family agreements that enable children to remain within the company but assigning its management to another figure. If, on the other hand, it is necessary to restore the health of a business, it may be useful to restructure debt, adopting solutions such as early arrangement with creditors, as direct or indirect going concern.

The new business model

At this particular time, explains the expert, a proactive approach is required also from companies who have already overcome the phase of generational handover: “We are facing a battle that could be very drawn out. This means we must reinvent our business models. Also considering that prior to the pandemic, many companies relied on a system of trade fairs to gain orders, unable to access a foreign sales network which would be too expensive.”

This type of strategy has been plunged into crisis by the pandemic, which has led to the cancellation or postponement of many events.

“This is why we need to stop and ask what can be done with our business. The options range from sale to consolidation of the business by opening it up to a foreign or financial party capable of promoting expansion in international markets or by seeking new investment for the acquisition of competitors in difficulty or other market shares.”

This is a situation that “has accentuated the need for specialised consulting for businesses. Our service is structured with a series of meetings. During the first hear the company’s story. After this, we gather accounting documentation and conduct research into markets and competitors. Finally, we propose an appropriate strategy. We also handle the selection of professionals and specialised consulting firms, based on the entity of the operation and the budget.