Sole proprietors (SPs), micro, and small medium enterprises (MSMEs) often focus on daily operations, immediate concerns, and customer needs. The insights from the 2024 PwC Philippine CEO Survey, discussed during the 22nd Management Association of the Philippines (MAP) CEO Conference 2024, offer valuable lessons that even the smallest businesses can adopt to secure long-term success.
The survey, conducted by PwC Philippines in partnership with the MAP, surveyed business leaders about their challenges, strategies, and forward-looking perspectives.
While large enterprises may operate on a different scale, there are fundamental principles that MSMEs can leverage to strengthen their sustainability, adaptability, and growth potential.
As most of my e-commerce and leadership advocacy work focused on MSMEs, mostly SPs, I can’t help but think about how they need to consider the long-term sustainability of their endeavors.
Adopt a Long-Term Vision and Succession Planning
One of the most crucial lessons from the report is the importance of succession planning. For large organizations, leadership transitions are critical to ensuring business continuity.
Surprisingly, many SPs operate under the assumption that their businesses will continue indefinitely or cease when they step away — without formal plans in place.
Many MSMEs, particularly those run by SPs, fail to consider succession planning. Whether it’s a family member, a trusted employee, or an external buyer, having a plan in place can ensure that the business doesn’t collapse if something happens to the owner.
Furthermore, the lack of a formal succession plan may prevent a business from scaling or being sold at the right time. The report found that 45% of businesses surveyed plan to make leadership changes in the next three to five years, but only 25% have established formal succession plans.
SPs should start by identifying potential successors, even if they don’t intend to leave soon. It’s important to think about who might carry the business forward.
Additionally, they should document systems and processes, creating operational manuals that make it easier for someone else to take over. SPs might also consider transition models, such as selling or transferring ownership to employees or family members when the time comes.
Leverage Technological Transformation
Another key finding in the report is the transformative role of technology, particularly Generative AI, which many CEOs believe can enhance business operations, products, and services.
Large businesses are increasingly adopting AI tools, cloud computing, and automated systems to drive efficiency and gain a competitive edge.
While MSMEs may not have large budgets for technology, there are cost-effective solutions available that can make a huge difference in streamlining operations, improving customer service, and driving sales.
SPs should recognize that technology is not just for large enterprises — digital transformation is a necessity for businesses of all sizes. Starting small with automation tools, such as chatbots for customer service or simple CRM systems to manage client relationships, can help.
They should also adopt digital accounting systems to streamline bookkeeping and inventory processes, improving efficiency. Being open to AI opportunities as they become more accessible can optimize customer outreach, product recommendations, and other key operations.
Understand Multigenerational Workforce and Customer Base
The report emphasizes the challenges businesses face in managing a multigenerational workforce, especially as Baby Boomers, Gen X, Millennials, and Gen Z work together in organizations. While SPs may not have large teams, understanding generational shifts is still vital for serving a diverse customer base.
Different generations have unique needs, preferences, and values. For example, Gen Z and millennials are generally more tech-savvy and expect fast, digital-first customer service, while older customers may prefer more traditional interaction methods.
By recognizing these differences, MSMEs can better tailor their offerings and marketing strategies to appeal to a wider range of customers.
Adapting marketing strategies for different demographics, using targeted advertising on social media for younger audiences while maintaining direct outreach methods for older generations, can be a helpful strategy.
Moreover, continuously assessing the changing preferences of the customer base allows businesses to adjust their product or service offerings accordingly.
Manage External Risks: Economic and Geopolitical
The report also highlights how global geopolitical risks — such as the Russia-Ukraine war and South China Sea tensions — impact businesses across all industries.
While SPs may feel removed from these global events, external risks like supply chain disruptions, inflation, or changing trade regulations can still affect MSMEs, particularly those reliant on imported goods.
SPs need to be aware of these external risks and consider contingency plans, whether it’s diversifying their suppliers or building stronger financial reserves to weather economic volatility.
Diversifying suppliers and creating financial reserves to sustain the business during economic downturns are crucial steps. Being informed about economic and geopolitical developments that could affect their industry is important for proactive planning.
Embrace Innovation and Adaptability
Large enterprises are increasingly focused on business model reinvention, and MSMEs should follow suit. As the report highlights, companies that fail to innovate and adapt may risk becoming obsolete within the next decade. SPs need to periodically reevaluate their business model, looking for ways to innovate, introduce new revenue streams, or adjust their strategies to remain competitive.
Regularly assessing the business model and listening to customers can uncover opportunities for growth and change. Innovation often comes from understanding customers’ pain points and developing solutions to address them.
Prioritize Sustainability and Social Responsibility
As the world becomes more environmentally conscious, businesses of all sizes are expected to adopt sustainable practices. The report emphasizes how larger companies are integrating sustainability into their core strategies, and MSMEs should not be left behind.
In fact, smaller businesses can often adopt sustainability practices faster than larger ones due to their size and flexibility.
Reducing waste, sourcing locally, and promoting sustainability as part of the brand can attract environmentally conscious customers while reducing operational costs.
Develop Personal Leadership and Empower Others
While MSMEs may not have large teams, SPs can still benefit from strengthening their personal leadership skills. The report stresses the need for empowerment and leadership development, especially in times of uncertainty.
SPs who continuously improve their leadership skills will make better strategic decisions, learn to delegate effectively, and ensure their business is not solely reliant on their efforts.
Investing in self-development through courses, empowering key employees, and seeking mentorship are important steps toward stronger leadership.
Collaborate and Build Alliances
Finally, the report underscores the importance of collaboration and alliances for business growth. SPs often try to do everything on their own, but building partnerships with other businesses, suppliers, or service providers can open new opportunities, reduce costs, and expand networks.
Joining local business networks, chambers of commerce, or seeking strategic partnerships can provide opportunities for growth and access to new markets.
The 22nd MAP CEO Conference 2024 report provides a wealth of insights that MSMEs and SPs can apply to their businesses. While the scale of operation may differ, the underlying principles of succession planning, technological adoption, customer engagement, risk management, innovation, sustainability, leadership, and collaboration are relevant across the board.
By embracing these strategies, SPs can build more resilient, future-proof businesses that are better prepared to navigate challenges and seize opportunities in an ever-evolving business landscape.
