There's no good that can't end, but then again... no evil can last forever!

If the years 2020 and 2021 were demanding, the volatility and uncertainty that, on the day of writing, surround the business world are such as to suggest that the risks and concerns expressed in the responses to the SME Barometer 2022 should be amplified, optimism should be mitigated and entrepreneurs should prepare for a difficult year that will again test their resilience to the second brutal shock in less than three years. I will therefore focus, from a short and medium term perspective, on the challenges that the 2022 Barometer points out:

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CHALLENGE 1: PEOPLE

Regardless of size, sector or timeframe, this is one of the biggest challenges facing companies in the near future. The talent shortage is pointed out in all activity sectors as a predetermined trend (i.e. with a very low degree of uncertainty, but with a very high impact). In these circumstances, two very relevant actions are required from two different types of actors:

Public Authorities: co-design with the business world intelligent, pragmatic and effective policies directed to two fundamental areas: education and migration. The first is aimed at adapting curricula to the needs of a society of the future and to lifelong training; the second is aimed at attracting and retaining external talent to mitigate the shortages that, temporarily or permanently, the internal resources cannot (or do not want to) overcome.

Companies: strengthen the focus on employee retention and development. Given the scarcity of talent that is (and will be) felt, business leaders should favour human resource management policies aimed at the development of employee skills, establishing plans for the evolution of the cocktail of skills (technical, collaborative, social...) needed, integrated into incentive plans aimed at retention.

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CHALLENGE 2: PROFITABLE GROWTH

The 2022 Barometer lists three challenges (Sales / Money / Marketing and Communication) that I have decided to address jointly as their degree of integration justifies it.

Public authorities: in the short term, the solidarity of society is again required, through the provision of public funds, to help companies in sectors that are still weakened by the impacts of the pandemic and / or are suffering the impacts of war in Ukraine in supply chains and cost structure. From the statements of government officials, this seems to be on the horizon, and all that is needed is speed and agility for the funds to effectively reach companies. The national and community business support funds will also certainly need to be reviewed so that they take into account the medium-term sustainability of the consequences that the war in Ukraine will bring to the whole of Europe and, naturally, to Portugal as well.

Companies: Business leaders need to implement short-term actions, many of them tough and difficult, to accommodate the component of rising raw material and energy costs that they will not be able to fully transfer into the price of the products and services they place on the market. It is very likely that under these circumstances the sales growth indicated in the 2022 Barometer will not materialise or, if it does, it will occur with a reduction in margin that will not bring the release of funds that were estimated! This leads us to be very cautious with companies' available funds and to carefully manage their balance sheet, both in terms of debt and investment. Naturally, in difficult situations such as those that will be experienced in 2022, it is also the time to deepen organisational transformation, whether through the redesign of processes for greater efficiency, or the diversification of supply sources for greater resilience, or to take advantage of acquisitions of companies that cannot withstand the difficulties, or even to deepen the uniqueness, perceived by customers, of products and services that enhance greater capture and retention of customers and consequently sales (with increased profitability) in the future.

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CHALLENGE 3: FUTURE-PROOF

It is not certain that the challenges of sustainability and digital transformation will have such an expressive progress as that enunciated by the 2022 Barometer. Not only is it desirable, as the train of the future does not stop, it is also plausible that the evolution of the context mitigates the focus of companies in these areas. Once again, the two actors are called to act:

Public Authorities: Any review of the above-mentioned Funds that eventually takes place should not neglect these two areas (sustainability and digital transformation), as they are essential for society and the business world to be able, once the storm is over, to cope with the positive impact on the way all generations want to live!

Companies: Although in the short term there is a moment of suspension of the transformative plans in the organisation, since the impacts to be managed are of a scope and depth that leave no alternative, companies should not abandon the effort of redesigning processes, products and services, nor the capture and retention of the talent capable of helping in the transformation of the company towards a more sustainable future and with an end-to-end digitalisation with a very positive impact on society and on the profitability of operations.

I end with a note of hope: There's good that can't end, but also ...

 ... no evil can last forever!

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This article is republished under a partnership with PME Magazine. Read the original text here.