Navigating your business through the transition in administrations

WITH a new administration set to take over in the next six weeks, business owners are watching for a platform and policies that will affect their decisions. Which direction should businesses go in the next six years? A change in administration brings about a shift in economic strategy, which affects jobs, trade and tariffs. A new president of the Philippines was just elected, what’s next?

A lot of articles about economic forecasts were written in the past weeks. My personal opinion is that these were premature because the transition period from one administration to another has yet to begin. In this article, I will attempt to help business owners navigate through the new president’s first 100 days in office. It will be a practical approach on how to prevent your business from slowing or worse, stalling, during this period of change.

Flashback to 2016. I was in the middle of starting a shared services ROHQ of an Australian company here in the Philippines during the Aquino to Duterte transition. Specifically, I was in the middle of managing a fit-out of the business site. I had just completed the audit and regulatory process of the company’s PEZA (Philippine Economic Zone Authority) accreditation when I encountered a complication — the outgoing PEZA director general’s term had ended in June and the position would be vacant until September 2016. In managing the financial implications of the delays in opening a new operations site versus potential tax holidays, the business decided to forego tax holidays.

Contrary to what people believe — that there is little to no effect in businesses during the transition period — personal experience proved that it definitely has its effects. The uncertainty over the start of the new director general’s term made the operations site unused for six weeks. Deciding to proceed with the importation of computers took longer since we were unable to use the importation green lane. The business was unable to avail of tax holidays that would have been savings for other investments. Mindlessness in navigating your business during this time costs time and money — in my case, it was two months and a few million pesos.

You cannot totally mitigate the effects of this change on your business but there are ways to make it change resistant. Here are some measures to help your business cope:

– Minimize or delay regulatory changes until appointments to key agencies dealing with your business are completed. Are you planning changes in your general information sheet with the Securities and Exchange Commission? Are you about to transition your business from being a sole proprietor into a corporation? Are you updating your registration with the Bureau of Internal Revenue? Right now, these changes may be more harmful to your business. If you are applying for financing, for example, the approval process may be delayed.

– Talk about foreign investor jitters will be rife. For now, reduce foreign exchange exposure. You do not need to necessarily stop spending because your business needs to keep on going. If you are a trading company importing goods, it will be worth it to diversify your suppliers with entities in countries where the Philippine peso is performing better. The US dollar is relatively strong and having trade partners in other countries as options will benefit your business now and in the long run.

– Expect policy changes. The government manipulates the levels and allocations of taxes and government expenditures. This is to stabilize the economy by maintaining or improving employment, growth, prices and wages. Your company will be affected by any of these changes, one way or another. Diversify your product and service offerings for multiple revenue streams. Policies may affect one depreciate one product but may boost another.

– Watch out for the administration’s priority programs because these may guide your go-to-market strategy. Priority programs create new markets businesses can tap. Arroyo’s telecommunications infrastructure paved the way for the growth of the BPO sector, Aquino’s PPP and Duterte’s BBB programs paved the way for a boost in construction. Follow where the money is and market your products to industries directly involved with the priority programs and emerging sub-industries.

– A new administration also ushers in opportunities for businesses, and it is important to be financially sound when these materialize. It is beneficial to have a steady and reliable finance partner. First Circle was founded to help empower small and medium enterprises in growth markets by financing their businessto-business transactions. This is in hopes of bridging big credit gaps to help grow businesses by providing convenient and flexible financial services. Our culture of supporting customer growth is at the heart of everything we do.

A change in administration of the government means two things. It can either be a continuation of policies and financial management or a big shift. For now, it seems like the incoming Marcos administration will continue the existing policies, spending and debt management of the outgoing Duterte administration. However, let us not forget that presumptive President Ferdinand “Bongbong” Marcos Jr. is set to leave his own mark and will be appointing a different set of people with different economic principles and beliefs. Be mindful of your next business moves — these times require pragmatic optimism. While you are optimistic about the future of your business, be pragmatic about what you need to do to get there.